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ON APPLICATIONS OF CUSTOMER RELATIONSHIP MANAGEMENT
BY: PADMANABH BOSAMIA YEAR: 2004-05 BACHELOR OF SCIENCE ADMINISTRATION WITH MARKETING AND BUSINESS EMPHASIS IN
ACKNOWLEDGEMENT When I started with this project I never knew anything about retailing industry in India. The only thing I knew was going on weekend shopping to various places. The moment at which I started to know about the retailing industry I soon realized that it was a daunting task to gather the data and analyze it. Especially the data about the customer who is a member of any of the shopping loyalty clubs in India. At some stage while doing the project I almost lost the focus and the drive to complete the project on this topic. The moments I have shared with different people while relating to them on this project would always be a memorable experience in my life. I admire the way in which Miss Vaijyanti Veeraghavan, Skyline Business School has helped me. She has been an inspiration to me. I believe that without her interest I would have never been able to do this project. I would like to also add that people at Pantaloon (Gurgoan) Mr. Pradeep Gupta, Mr. Sunny and other staff working in the stores were very polite and helpful when I was doing my research. A project is never complete if the primary research hasn‟t been done correctly. I would like to convey my regards to all the people who helped me fill the questionnaires during my research.
ABSTRACT The organized retailing in India is expected to cater 3% of the total market sales in Retailing in India by 2006. In my dissertation I have highlighted the major facts about the organized retailing in India. I have highlighted the major retailers and have presented their Loyalty programs. Most of the organized retailers in India have similar loyalty programs compared to international retailers that have differentiated loyalty programs. As the CRM process in the Indian retailing sector is still at a initial phase so I cannot really predict the future of organized retailing in India. Yet, it has to be granted a status of an Industry by Government of India. In my questionnaires I have tried and highlighted the need of changing the loyalty programs for attracting higher number of footfalls. I hope this contributes to the loyalty of major organized retailers in India.
INTRODUCTION Retail Sales, which amounted to about Rs 7,400 billion in 2002, expanded at an average annual rate of 7% during 1999-2002. With the upturn in economic growth during 2003 retail sales are also expected to expand at a higher pace of nearly 10%. In a developing country like India, a large chunk of consumer expenditure is on basic necessities, especially food- related items. Hence, it is not surprising that food, beverages and tobacco accounted for as much as 71% of retail sales in 2002. The remaining 29% of retail sales are non-food items. The share of food related items fell over the review period, down from 73% in 1999. This is to be expected as, with income growth, Indians, like consumers elsewhere, spent more on nonfood items compared with food products. Retailing as in the other parts of the world will be taking a major shift in India. Therefore, there will be advent of lot of retail chains in all sorts of retailing. Indian Retail is gearing up to provide customers an international shopping experience. Loyalty programs, which give consumers rewards for repeat purchases from particular stores are common in the market today. The retail industry is very large. Retail is the country‟s largest source of employment after agriculture, has he deepest penetration into rural India, and generates more than 10% of India‟s GDP. With close to 12 million retail outlets, India has the highest retail outlet density on the world. In spite of this, retail is also India‟s least evolved industry. In fact, it has not even been accorded the status of an industry. Defining Retail Trade: The retail trade sector comprises establishments engaged in retailing merchandise, generally without transformation, and rendering services incidental to the sale of merchandise. The retailing process is the final step in the distribution of merchandise; retailers are, therefore, organized to sell merchandise in small quantities to the consumers and not for resale.
The Indian Story: For almost half a century, a paternalistic regime of control in India manifested itself in licensing laws that restricted the production of consumer goods and in regulations that limited the size of manufacturing plants. For a long
Market liberalization and an increasingly assertive consumer population is now sowing the seeds of a retail transformation that has started bringing in bigger Indian and multinational operators on the scene.time. I would be analyzing the various customer loyalty programs of five companies that is Lifestyles. any watch as long as it was from HMT. Figure 2: Indian Retailing Opportunities Through my dissertation I would be studying how the Indian retailing sector and consumer demographics are shifting. and any radio as long as Phillips produced it. Shoppers Stop and Ebony. The story is no longer the same. After studying the loyalty programs I would be comparing it with Pantaloon and then identify the gaps if there are any in the CRM process of the company. Pantaloon. I would be then be laying guidelines about developing a loyalty program. any toothpaste as long as it was Colgate. I would be then seeking for opportunities of strategic alliances to increase customer loyalty traffic opportunities in Pantaloon stores. Westside. the Indian consumer is on his way to become what his counterparts in the more developed countries of the world have been for decades. 1 Evolution of Indian Retail The concept of retailing in India dates back to ancient times when it was mainly in the form of weekly markets and the village fairs (Melas). Changing socioeconomic patterns and consumption levels shifted the focus of retailing to mainly convenience stores for daily needs with few prominent retailers on the high street in each city. a special mention must be made of the . The past decade has witnessed a tremendous revolution in the Indian Retail scenario. While talking of Indian retail. the Indian consumer could buy any car as long as it was outdated Ambassador or a Fiat. At last I would be relating future of loyalty programs. With the advent of these players.
The manufacturers and exporters also saw a potential for forward and horizontal integration of their respective business lines. there have been three categories of Indian businesses that have ventured into retailing as their business extension. it was not possible for many players to start their operations from main markets or high street. This marked the beginning of the retail revolution in India. both Indian and multinational have started recognizing the immense potential that the Indian retail sector provides. absence of toilets and improper maintenance observed in such places. With the opening up of the economy in the early nineties. a) Real Estate Developers b) Corporate Houses c) Manufacturers/Exporters Due to scarcity of space and stringent provisions of rent control act. This saw the emergence of the brands like Pantaloon. Provogue and Planet Fashion. Lacoste. as they had understanding of real estate. one of the most critical component of the business. It led to the establishment of specialty retail stores like Foodworld in grocery. Shoppers had to cope up with lack of parking space. Over the past decade. these complexes has nothing much to offer other then allimportant location.role played by the PDS outlets. 2 Big commercial plazas with prominent nationwide and big city based retailers were the next step. but hardly does it find a mention anywhere in the Retailing literature. This explains the natural progression of developers like Rahejas to kick start their retail venture Shopper‟s Stop. Amongst the Indian corporate. due to government restrictions. Retail also presented an excellent opportunity for corporate houses like Tata. However. Shops offering wide variety of goods and services were merely clubbed together without any stress on providing any value-added services to customers. Reebok. The Indian government‟s PDS Outlet chain is amongst the largest retail chains in the world. 3 4 . Nike. India saw the entry of the big international brands that opened their exclusive stores. United Colors of Benetton were a few of the first retailers to set up their shops in India. most foreign players still haven‟t been able to enter the Indian market. RPG and ITC profitably invest their excess funds as well as extend their business lines or brand reach. RPG‟s tie up wit Dairy Farm International was the first Joint Venture in organized retailing in the country. But. Health and Glow in Pharmacy and Musicworld in music. corporate. cooperatives and Khadi stores.
The entry into retailing by MNC brands has driven the growth of specialty chains and upgraded the standards of existing multi-brand outlets.most notably Chennai. footwear and durable. On the demand front. RP. nearly 20 percent of food sales now flow through supermarkets and an equal share of “durables” is sold through specialty chains such as Viveks. These include large Indian business groups such as the Tatas. customer spending has been on the rise and brand consciousness has also increased substantially. Figure 2 Historic/ Rural Reach Traditional/Pervasive Govt Supported Modern Format . Until now. consumer research shows that households is metropolitan cities are gravitating towards supermarkets and other modern retail channels. competition in the sector has been largely local with large global retailers such as Carrefour and Wal-Mart absent. Consumers have started demanding a better shopping experience as global media exposes them to different lifestyles. South India. On the supply front.The past 6-7 years have been especially exciting for the Indian retail industry. Sweeping changes have affected both the supply and the demand fronts of the market. the Rahejas and Piramal. a number of organized retailers have entered the trade in the last 5 years. as well as MNC brands in apparel.
however. zero usage of technology. serve to absorb agricultural labor.Source of Entertainment Neighborhood Stores Availability low costs Convenience Costs/Distribution Experience Shopping Retailing In India Retailing in India can be classified under two heads: organized and unorganized retailers. unpaid/cheap labor (family members or village children paid below minimum wages) and zero taxes. These are highly competitive outlets. and little or no ambience. These formats have emerged largely due to the absence of alternative employment and typically require employees with very low skills. They are. The unorganized retail formats are typically mom-and-pop stores. fixed process. street markets and vendors have low productivity potential because of their unorganized systems and processes. Many of them also leverage the low or no cost of family labor to provide services like home delivery that would be uneconomic for any organized retailer. . and do. kiosks. Traditional formats such as rural counter stores. Unorganized retail is the dominant mode of retailing in the country with organized retailing contributing to roughly around 2% of the whole market. with very basic offerings. very important as they account for two-thirds of the sector‟s output. drawing on free land (unregistered kiosks or traditional property). These formats can.
This format is new to India and only three supermarket chains of note exist – Foodworld. with fewer cash register and sizes that are at least a . Rural counter stores are multi-purpose stores that sell items of essential need. The best practice chains in this format are Carrefour (France). street markets comprise multiple stalls (often more than 200) selling a wide range of food and non-food products. in the major metros of the country. Kiosks are convenient for impulse or emergency purchases. The development of the organized retail sector. In spite. pavement stalls stock a limited range of food and beverage items. Indian supermarkets are smaller than those in other countries are. Experiences in the developed and developing countries prove that performance of organized retail is strongly linked to the performance of the economy as a whole. Wal-Mart (US). This is mainly on account of the reach and penetration of this business and its scientific approach in dealing with the customers and their needs.000 square feet plus) self-service stores selling a variety of products at discounted prices. has begun to change the face of retailing especially. and offer competitive prices due to economies of scale in logistics and purchasing. Retail Formats in India Rural counter stores: Indian retail is dominated by family. Indian retailers are facing some challenges (see Appendix: Evolving Real Estate) which have stymied its growth. These markets compete on both variety and price. Kroger (US). Street markets have traditionally acted as a place in social gathering. These stores are often located in rural homes and serve to supplement the family‟s income from agriculture. and also sell counterfeit goods and smuggled items.run counter (kirana ) stores that stock a range of branded / unbranded items.Organized retailing in India is gaining wider acceptance. Tesco (UK) and Metro (Germany). Street Markets: held at fixed centers in urban and rural areas on a daily or weekly basis. and are located in busy commercial and market areas. Nilgiri‟s and Subhiksha. both food and non-food. 5 Kiosks: These small. The bazaars in Poland and openair wholesale markets in Russia are the foreign equivalents of this format. of the positive prospects of the industry. Supermarkets tend to be located in key residential markets and malls. HyperMarkets: These are large (20. during the last decade.
Tower Records and The Sports Authority).000-4.g.000 sq.. Mark & Spencer‟s St. Category Killers: These are the giant retailers that dominate one area of merchandise (office Depot. Lacoste and Benetton. typically through franchising. Even though urban counter stores have existed for decades. Levi‟s and Benetton. the deep discounts now fact competition from category killers. Department stores are found on high streets and as anchors of shopping malls. This format has seen the highest levels of adoption in India. The food stores stock a wide range of branded and unbranded food items.g. Even more alarming is the growing realization among their harried shoppers that traipsing through endless aisles of merchandise just to a roll of tape and some underwear isn‟t worth the savings. I have included in the category of modern formats given that they have more organized systems and processes (Kiosks) and provide stable employment. While most specialty chains compete on service a segment called “category killers” offers price as an advantage (Toys „R‟ Us is a good example of a category killer).. footwear and household products. Pantaloon group in the name of Big Bazaar has recently started. (E. with several chain s establishing a strong presence. They are able to buy bathroom titles. e. file cabinets. usually non-food items. Shoppers Stop. ft versus 20.000-25. In India.food counter stores typically stock multiple local brands.fifth of the global players selling area (3. Discount stores: These are giants such as Wal-Mart. Michael). the largest retailer in the world. Originally set up to serve members only. Westside and Ebony) Specialty chains: These retail outlets focus on a particular brand or product category. non-membership warehouses. Non.00 sq. They stock multiple brands across product categories. and are located on high streets and in shopping malls.g. electronic goods or pet food in such huge volume that they can then sell them at price even fairly large competitors can‟t . though some of them focus on their own store label. and mass merchandisers like Ross. Several local department store chains have opened shop in India in the past 5 years (e. They typically have a loyal clientele bound to them by personal relationships and the convenience of credit and home delivery. and warehouses such as Costo. Examples of specialty chains include Gap. Urban Counter stores: These small family run stores dominate food and non-food retailing and are found in both residential and commercial markets in towns and cities. ft) are Department stores: These large store primarily retail non-food items such as apparel.
As she traverses this path. irrespective of her socio-economic origin. Also. we find that she defines fulfillment “materialistically and emotionally” no different from her more moneyed counterpart.and-learn experiences with vendors and distributors before you move onward and upward. SEC. The asset acquisition rate of the average Indian consumer has been on the rise ever since India opened its markets in 1991.match. The outlook for this category is better than for many of the more general discounts. a whole segment of post-liberalization children. the Indian consumer is out to seek pleasure and lifestyle. 6 Also. showing a clear shift from the need-based shopping trends of the pre-liberalization India. Shopping is increasingly becoming a family experience. constituted by a whopping . For most job seekers. 177 million households in India are at various stages of defining their “self” from the “common”. these companies offer earn. be on a self-appeasement mission. Greed is good and she wants more of the best that life has to offer. but the same employment caveats apply. especially due to the increased levels of exposure to international lifestyles and better levels of education. the Indian consumer is more discerning and demanding than ever. Figure 3 Source: KSA Technopark The Changing in Indian Consumer There is distinct evidence to suggest that the Indian Consumer. and is expected to grow at an even greater rate.based classifications notwithstanding .
by ensuring availability of a greater variety and quality of products at never before price points. . They make suggestions. Already customers are getting actively involved. either directly or indirectly with production processes. The Euromonitor retail survey estimates that there has been close to a 20. 7 This change in consumer spending patterns has turned out be a major driver of the rapid retail revolution that we have been witnessing over the past few years. Companies that have adopted CRM regard every customer as an individual with specific needs and tailor their services accordingly.9% growth in the real disposable income of the Indian middle class in the four-year period of 1999-2003. corporate profitability and shareholder value. has been rapidly growing at a pace of 10% per annum over the past decade. Information Technology comes into the picture to help manage Customer relationships in an organized way. This demographic segment. CRM is not a tool that is specific to any industry type. which is widely believed to be a main driver of the global retailing industry. Also.100 million 17-21 year olds is coming of age. they ask for smaller. Refer to ( Appendix: Evolving Consumer Demographics) Customer Relationship Management (CRM) CRM is a management approach that seeks to create. CRM leverages information technology (IT) to implement relationship-marketing strategies. so there is no one single definition of Customer Relationship Management. It is up to the organization to formulate one for itself in order to achieve the CRM goals that it sets for itself. brighter. One noticeable trend in this regard has been the rise in the spending capacity of the Indian middle class. the increasingly competitive nature of the Indian market in categories like FMCG and consumer durables has increased consumer spending. easier-to-use products. A host of their related factors like falling interest rates and easier availability of consumer credit have facilitated the Indian consumer‟s affordability. Complementing this growth in income is the rise in the middle and high-income population itself. develop and enhance relationships with carefully targeted customers to maximize customer value. and the segment is spending like never before. Also of significant importance is the rise in the affordability of the Indian consumer.
More than ever.” With a wide variety of services available at competitive prices and easily accessible at the click of a button. To stay ahead of competition. a surge of women two wheeler drivers! The success of companies will depend on how well they are able to predict customer behavior. Companies that followed up lapsed cases experienced 20 to 40 percent successful sales.On an average a company has only a 5 to 20 percent probability of making a successful sale to a new prospect but has a 60 to 70 percent probability of selling again to active customers. Customers are driving companies to migrate from being purely product-centric to purely customer-centric. Customers are continually pressing for improved support services in terms of product coverage. can help to motivate the best customers and to remain loyal as a method of increasing revenues internally. The volume of information available via the Internet will make the future customer a knowledgeable one. It would be wiser to invest in encouraging an existing customer to purchase again. would be having to kick-start her bike. Without a doubt customer retention is vital to every company's long-term profitability and success and CRM. response-time and price (or at least value-for-money!). anticipate requirements and provide for them. As more customers and businesses go online. companies will have to anticipate customer needs even before a need arises. through target selling and customer loyalty programs. he knows what he wants and the Internet is a powerful tool in his hands. the Internet will foster a global community that communicates at real-time. Today‟s customer has access to the latest technological devices that give him instant information. he has access to it all over his palm top. the smarter manufacturers realized that one factor that might hold a sari-clad woman back. PDA. customers today have an important role to play in the product lifecycle. his input will have value and his feedback will be . mobile phone or desktop. buy. From current customer trends. improved customer services are becoming the need of the day. As more and more women began to drive two wheelers in India. it is easy to define the future customer. Customers will have access to a wider variety of products and prices to choose from. Along came the self-starter button and presto. taking care of all customer requirements even before they are demanded. business-ease. allows him to make instant transactions. Rising customer expectations have stiffened the competition among companies to improve their customer support services. The future customer will have a larger stake in the company‟s project plans. sell or transfer money. Today‟s customer is knowledgeable.
Analytical CRM forms the core of a retailer's customer relationship strategy. CRM Strategy is bound to be a failure. data mining.consequential to the development of products or the way a service is delivered. Hence. Marketing and sales functions are the primary beneficiaries of Analytical CRM and the Main touch points from where the insights gained about the customer is absorbed in the Organization. Analytical CRM uses the key business intelligence tools like data warehousing. and third-party data providers. web site transactions. and OLAP to present a unified view of the customer. This implies a significant alteration in the supply chains that we see today. Without the means to analyze voluminous customer data. and (b) Analytical CRM: Sophisticated analysis of the customer data generated by operational CRM and other sources like POS (Point of Sales) transactions. Following are some of the uses of Analytical CRM In Retailing . Figure 4 The CRM strategy should include: (a) Operational CRM: Automating interaction with the customers and sales force. A typical retail organization has a huge customer base and often customer's needs are fairly differentiated.
this greatly helps in understanding what goes into a successful marketing campaign. add to this the net value of new customers referred by this customer. there are a number of subjective variables like overall duration of the customer's relation with the retailer. the idea is to establish long-term relations with these customers. and discount rate. Though this sounds easy.deduct the cost of servicing a customer from the expected future revenue generated by the customer. and discount the result for the duration of the relationship.Customer Segmentation Customer segmentation is a vital ingredient in a retail organization's marketing recipe. The basic methodology used to calculate customer lifetime value is . Campaign/ promotion effectiveness analysis can answer questions like: Which media channels have been most successful in the past for various campaigns? Which geographic locations responded well to a particular campaign? What were the relative costs and benefits of this campaign? Which customer segments responded to the campaign? Customer Lifetime Value Not all customers are equally profitable. gap between intermediate cash flows. Hence it is absolutely essential to identify customers with high lifetime value. For example it can help classify customers in the following segments 1) Customers who respond to new promotions 2) Customers who respond to new product launch 3) Customers who respond to discounts 4) Customers who show propensity to purchase specific products Campaign/ Promotion Effectiveness Analysis Once a campaign is launched its effectiveness can be studied across different media and in terms of costs and benefits. fashions and trends. We suggest data mining tools should be used to develop customized models for calculating customer lifetime value. . It can offer insights into how different segments respond to shifts in demographics. At the same time customers who are not very profitable today may have the potential of being profitable in future.
Target Marketing Retailers can optimize the overall marketing and promotion effort by targeting campaigns to specific customers or groups of customers.Customer Loyalty Analysis It is more economical to retain an existing customer than to acquire a new one.sales relationships for the product and how changes in prices affect the sales of other products. To develop effective customer retention programs it is vital to analyze the reasons for customer attrition. Business Intelligence helps in understanding customer attrition with respect to various factors influencing a customer and at times one can drill down to individual transactions. retailers can develop sophisticated price models for different products. Using data warehousing and data mining.sell more profitable products . which can establish price . Product Pricing Pricing is one of the most crucial marketing decisions taken by retailers. Target marketing can be based on a very simple analysis of the buying habits of the customer or the customer group. which might have resulted in the change of loyalty. This effort is largely based on the tastes of a particular customer. Cross Selling Retailers use the vast amount of customer information available with them to cross sell other products at the time of purchase. which can be analyzed using BI tools based on previous purchases. . Often an increase in price of a product can result in lower sales and customer adoption of replacement products.to the customer at the time of contact. Retailers can also 'up sell' . but increasingly data mining tools are being used to define specific customer segments that are likely to respond to particular types of campaigns.
Figure 5 .
Both Approaches are commonly known as customer loyalty programmes. As a result margins are Being eroded to dangerously low levels. This section examines the elements that need to be considered when designing a customer loyalty programme. Their promotional activity to the extent that sales and special offers have become Everyday affairs.Figure 6: Dynamics of Retail Business and Retail Mapping Figure 7: How CRM Delivers and No Takers for CRM Designing a customer loyalty program Customers' expectations are increasing. The more strategically minded retailers are introducing systems that monitor Customer behavior in order to respond better to their increasing demands. retailers are stepping up. Customers respond better to someone who understands their special . To achieve this the supplier needs to understand the customers' spending habits and know what products they currently buy (and don't buy) so that any communication can be meaningful. Finally. including mechanics and customer rewards. The objective should be to maintain the customer's loyalty. Some retailers have introduced card-based collector schemes that give electronic points According to the customer's spend. They want: service. The basic electronic points schemes are just another way of delivering a promotion and rely upon giving a higher value incentive to differentiate from the competitors. the latter Approach is the only one that is sustainable and really merits being considered as such. products that meet their Needs. What is Customer Loyalty? Customer loyalty involves building a long-term relationship between the supplier and the individual customer in order to improve profitability. value for money and added benefits. In response to this. rather than end of season stock clearances. thus preserving margins and profitability. not by bribery. however. but by offering a Better service. it reviews some data analysis techniques that can be used to refine the scheme in the light of experience gained from running targeted promotions. It defines the strategic objectives and examines what components of the scheme are needed to achieve the benefits. which are subsequently exchanged for gifts or Discounts.
If traffic through the store needs building or a supplier has a new product. To increase profit the aim will be to change customer behavior and. It should be embraced with a comprehensive customer care programme. a realistic target would be 10 to 20% on a long term basis. whilst retaining reasonable margins. Recent tests have shown that a spend related reward scheme can increase average spend by 30%. These will differ from scheme to scheme.a personalized approach offering products that are really relevant is more likely to produce the required result. thus improving profits. A successful scheme is one that engenders sustainable. turnover). all encompassing campaign. To be worthwhile increased loyalty must result in increased spend (i. however. A number of key objectives and the benefits to expect are discussed below: increase the turnover and profit customer retention establish long term relationships improve product awareness develop advocates increase frequency cross sell departments reduce mark-downs improve the effectiveness of direct marketing Increase Turnover and Profit In any business. Ideally. In a declining market customer retention may be the only objective. all customers need to be approached with something that motivates them to spend more if maximum growth is to be achieved.e. the focus will be on ways of attracting new customers. In all cases there is an essential need to know and understand the spending habits of existing customers and what entices new shoppers into the store. This cannot be achieved with bribery alone. . Objectives and Benefits When designing a customer loyalty programme it is. other than a declining market. which is not possible from a single.there is no point in rewarding customers for their loyalty and getting nothing additional in return. important to agree the strategic objectives.needs . first. the key aim of a customer loyalty scheme must be to increase profitability . long-term loyalty at an affordable cost. in particular. the customer needs to feel wanted and special. they‟re buying habits.
one approach to retaining existing customers is to offer a suitable reward scheme.a genuinely loyal Customer will become an advocate for the organization. Also. and making offers which are relevant. Also. the availability of a new product can be communicated to those customers likely to be interested with the aid of a suitable customer marketing database. some organizations establish a dialogue with their customers in order to obtain regular feedback on its products and services rather than conducting ad-hoc customer surveys. Improve Product Awareness A loyalty scheme that restricts redemption to November and December will increase the frequency during the key months when Diwali products are on display. With no advertising other than point of sale within the stores dramatic increases in club membership were seen. In both cases a loyalty scheme was devised for members of a long established club.Customer Retention Clearly. It is widely Accepted that it is a lot easier (and more cost effective) to sell to the existing customer base. Establish Long Term Relationships By definition. giving away something to those customers who would have made the purchases anyway is not cost effective. therefore increasing awareness. It is vitally important to know the customer's view of new and existing products and to gauge their reaction to targeted promotions. Develop Advocates Personal recommendation is the best way of attracting new customers . By raising the self-esteem of the customer and communicating on a personal level with worthwhile information. the perceived value can be made to appear high but at a relatively low cost. . Instead of expensive "giveaway's" the customer needs to be given special privileges as a member of an elite and prestigious club. However. this should be one of the aims of all customer loyalty schemes. Two recent trials demonstrate the pulling power of a loyalty scheme.
Increasing Frequency Out of town stores normally have a higher average spend than high street stores because Customers want to make it worthwhile to travel the distance. little scope to reduce the cost per person of direct marketing. Consider the gain to be made with one additional visit per customer where the average spends is RS 300 and the annual frequency is 4. This means a bigger return from the campaign or an equivalent return from fewer mailed customers. Improving the Effectiveness of Direct Marketing Mails are costly. example. Whereas there is. ladies may buy cosmetics on a regular basis but nothing else. Indiscriminate mass mails are wasteful and even more costly. To achieve this we need to understand what products are likely to appeal to particular customers groups. . perhaps. This is partly as a result of an association certain customer groups have with a particular product. Reduce Mark-Downs These days mark-downs have increasingly become a standard way of selling rather than a Mechanism for clearing unwanted or ends of season stock. Cross Selling Departments High street chemist chains stock a wide variety of products and often enjoy high frequency but very low averages spend. If this situation can be identified there is an opportunity for cross-selling departments. spend over RS 300 on 4 occasions within a month to earn a reward. again. or a free instant win prize on each visit. A loyalty scheme will reduce the need to employ these tactics. for example. often related to the customer segment and suggests targeted offers would be beneficial. This situation is. 'hit' rates can be improved dramatically by targeting those customer groups most likely to respond to the product(s) on offer. This has resulted in eroded margins and reduced profits. This has the added benefit of increasing the value of the loyalty scheme to existing members and providing a powerful reason for new customers to join. An appropriate reward scheme might be visit related for. Where stock needs to be cleared an alternative to price reductions is to make special offers to loyalty customers.
Depending upon the objectives the "points" can be related to one of the following: Spend To increase average spends. For example: 1 point for every RS 50 done by most of the retailers in India. Constantly reminding the customers of the benefits that are accruing will maintain interest and motivate them to reach their target even quicker.Elements of a Successful Scheme Since. To achieve this it is important to: Make the scheme understandable and easy to use Offer a reward with wide appeal and a high perceived value Communicate with the customer in a way which is meaningful to them Establish a way of "locking-in" the customer The Mechanic There is no universal reward mechanic that will work for everyone. It has to be designed taking into account the: Strategic objectives Retail operation Frequency of purchase Value of purchase Average spend Customer types and groups Whatever is appropriate it is essential to communicate to the customer what he/she has Earned. Frequency Appropriate to build traffic through the store. Particularly useful for low value products. useful to make customers aware of new products on . by definition. Also. the customers' interest needs to be maintained. where the propensity to spend is already high for visitors. There may be a minimum purchase necessary and increasing Level of points or discounts earned for an increasing spend. a scheme needs to be long term and cost effective. Statement based schemes where the customer is informed at three monthly intervals are only appropriate for low frequency operations. In a reasonably high frequency outlet this will normally mean telling the customer his/her cumulative "points" balance at the point of sale at every purchase.
Product/Department Provides the means by which suppliers can participate in the scheme by funding special offer points. Increasing value rewards for increasing spend enables the impatient to receive some reward quickly to get them "hooked". but in all cases it should be: Attractive and desirable to the target audience. Low actual costs. it is highly dependent upon the type of customer. Achievable in a reasonable timescale whilst bearing in mind that the customer should be made to work for his/her reward but not feel that it is only appropriate for the very high spenders. A high perceived value to make it a genuine reward for loyalty. Interestingly. Types of Reward These fall into four categories: . For example: spend RS 300 on 4 separate visits in a month and receive 100 bonus points. The Reward To motivate the customer to participate the choice of reward is vitally important. For example: double points on Mondays. a Cut-off date does increase spend as customers strive to maximize their points before Closure. Period Special offers to attract customers on light days. Can be achieved by offering shelf products.display in the store at the start of a new season. Of course. which have an in-built Margin. A range of rewards to give broad appeal to a wide range of customers. A cash-in dates so that the liability can be calculated and cleared down.
Not appropriate if there is no direct benefit to the customer or his/her family such as free petrol to a company car driver. travel seats etc) Increased privileges (at little or no cost) The aim should also be to retain customer's loyalty through the relationship marketing by making full use of the database. charities etc. hotels etc. car hire. holidays. The reward can be reduced over . Examples are as follows: Increased spend Increased frequency (and hence spend) Reduce mark-downs Increase margins Offer spare capacity (e.hotel rooms. Funding the Reward It is important to understand from the outset how the reward is to be funded and to calculate the likely cost (and the benefit). The reward has to be appealing to the charity concerned. Affinities Increasingly popular for schools. Provides a good mechanism for broadening the appeal and providing a range of rewards easily. which can be used for discount travel. Gift Catalogues Gifts as in terms if Vouchers given by Retailers to their customers.g . Perhaps surplus product can be used (as long as it is still desirable). Though hardly any retailers use it in India. discounts or services. Currencies For example: Most of the airlines use in India Free Air Miles.Own Goods For example: gift vouchers. Generally low cost because the reward has a built-in margin. Applicable when the product is desirable and is not replacing genuine purchases that would have been made anyway. the strategy will depend on the individual retailer's circumstances and objectives. Again.
Categories of Data to Capture It has already been pointed out that storing data is expensive so it is important to capture only that which is really needed.time. However. possible to deduce certain details later. Before embarking upon the building of a marketing database it is important to have clear objectives. Storing data is expensive. For example: if payment method is captured on each purchase we can soon learn what credit cards are held. suppliers and service providers have already discovered. The category of data detailed below is a comprehensive list of what can be collected. rent) Credit cards held Interests? Special needs etc. However. it is important not to confuse supplier led brand switching schemes. The purpose is to increase spend not switch it from one product to another. Frequency . Customer Details This is fairly static data including: Name and address Family and ages Job and income level Residence (own. Some retailers look to their suppliers to fund their promotions by offering rewards based entirely on individual product purchases. however. etc. if toys are purchased we can gain details of the children from the guarantee registration card. Capturing Customer Data In the right hands a marketing database presents an exciting opportunity to increase the value of existing customers as well as providing a means of attracting new ones. as many retailers. which have no place in a customer loyalty scheme. etc. it can be an embarrassingly expensive millstone if not properly thought through. Not all customers will give all this level of information on first asking. It is.
on what days? Will this customer travel give the right incentive? Products Purchased Offers what special offers are taken-up? Departments what is the level of spend by department? How does this vary by season and promotion? Lines what is the typical shopping basket of this individual? Capturing the data can be relatively straightforward but it is unlikely that anyone will really need to maintain a history of each and every product item purchased by each and every customer. designing a successful scheme has to be an iterative process: . Is this potentially a lost customer? Spend Is this increasing as required? Does it vary by customer profile? Do particular types of promotions affect it? Sites Visited Is the customer loyal to a particular store? What distances are traveled. The dichotomy is that in order to design an effective scheme there needs to be a good understanding of the customer and one of the purposes of the system is to capture data to achieve this. For a large supermarket chain this would amount to approximately 500 gigabytes per annum! Monitoring. Therefore. Measuring and refining the Scheme As has been stated earlier in this paper it is important to define the objectives at the start and design the scheme and system around achieving those objectives.How often does this person visit the store? On what days of the week? Hour of the day? Is the frequency increasing or decreasing? Do certain types of in-store promotions or mailing campaigns effect the frequency? Regency When did the customer last visit.
) but can also be linked to lifestyle data.1. which is based on past behavior: Identify customer purchasing characteristics or attributes Score individuals according to the characteristics Target the high scoring individuals in future promotions Customer characteristics are purchase related (e. Segmentation Segmentation involves defining customer groups and devising separate marketing approaches to each group. Implement system 3. however. which are self-learning (e. Above It is not the purpose of this paper to examine ways of analyzing customer data. It is expected that customers in the same group will react to promotions in a similar way. Return to 2. Considerable advances are being made in this area with the emergence of "intelligent" techniques. neural networks). Cluster analysis is a statistical technique for segmentation.g. The high scoring individuals (i. average spends. which can be lifestyle based but preferably uses purchasing data: Identify customer purchasing characteristics or attributes . Design basic scheme 2. Measure response and performance 5. Monitor customer behavior 4. A common technique for this is regression analysis. Targeting Targeting customers is a way of improving the response rate to promotions.e. and then using the data to improve the offer. stores visited etc. Refine the design in the light of experience 6. Customers within a segment are as similar as possible and customers in different segments are most dissimilar. This involves Measuring the size and characteristics of the target audience and the response and behavior to various offers. those with common characteristics) are expected to yield a higher response rate. This again relies upon identifying like characteristics. two statistical techniques (regression and cluster analysis) are mentioned as examples for targeting and segmentation. frequency.g. Departments/products purchased.
The best loyalty programmes are driven out of customer anaytics that work on mature data. data maturity and organizational preparedness. it is important to carefully analyze the objectives and the benefits that are expected. Launching a loyalty programme depends on the Life State of a mature CRM system. enabling retailers to create a dialogue with customers. which builds stronger relationships since the marketing is more meaningful to the individual customers. right way to market through any one channel. It needs some amount of investments in technology. there is no one. differed or otherwise and need efficient management. Whereas there is every likelihood that in five years time most retailers will have a customer loyalty scheme of some form. In summary. Divide into large number of segments Reduce segments to a manageable number by combining segments with close Characteristics (nearest neighbor method) Market to customers in same segment This technique enables appropriate and relevant offers to be made to customer groups. they are more milling to share information as well. specialized software. but there is a right way to market to customers across several channels.When customers opt in to a permission-based loyalty programme. Earned rewards program by most of the retailers in the form of vouchers in India are actual cash payoffs. Clearly. you should only embark on such a system if one or more of the following is true: You can benefit from knowing your customers and they‟re purchasing behavior You have an attractive proposition that is sustainable over the long term There is a competitor threat emerging that can be defended by locking in your customers Into long term loyalty programme Your competitors are implementing a scheme (?) It will retain your share of a declining market The cost/benefit analysis shows that profitability can be increased as a result Customer Loyalty Programs of Retailing in India A loyalty programme is an advanced stage of a well-managed CRM process and must be graduated to and not jumped into. A successful . and a loyalty marketing programme can help. And then to constantly review the benefits that is actually being achieved and refines the programme accordingly. statistical tools and logistics.
Recent studies indicate that customers who shop more than one of a retailer's channels . Cross-promotional materials should be present and easily obtainable.programme assumes that all channels are included in the customer relationship that measurable objectives have been established. Trust: Keep the promises made by the loyalty programme. Ebony: Elite club. 4. 3. 2. And while the price of merchandise should be consistent across all channels. Simplicity: To succeed. Retailers cannot afford to let legacy systems interfere with building this knowledge base. don't be afraid to offer incentives to encourage customers to try a new shopping experience. Minimize the fine print. If the promise is for a personalized. A well-conceived and executed loyalty programme can be the key to turning invisible shoppers into hand-raising volunteers and profitable customers The organized retailers in India have started with their loyalty programmes for instance Pantaloon: Green Points. Visibility: A loyalty programme must be highly visible regardless of the channel. With this foundation in place. The best way to coordinate marketing objectives across channels is to build a knowledge base of customer behaviors and preferences. highly valued service.perhaps looking online and buying in the store or reading the catalogue/leaflet and buying online-spend more money with that retailer than single-channel shoppers. a loyalty programme must be easy to use in all channels. a programme can boast the following characteristics: 1. Though every loyalty club has its pros and cons to the program but the main reason of worry for the . don't bombard program participants with meaningless offers that obviously are available to everyone. Lifestyles: The Inner Circle and Westside: Club West these loyalty programmes are in built up with the CRM strategies for each companies. Programme rewards should be credited regardless of where the customer prefers to shop. the more the customers have to figure out. Value: The balance of reward and recognition must establish value in the customer's mind and motivate incremental purchases. A Web site can show special offers for programme members. the less they like the programme. and that promises are kept. a catalogue can feature the programme prominently and shoppers in the store should be asked if they'd like to join. Shoppers Stop: First Citizen.
managed by the Taj Group. womenswear. As part of my dissertation research shows that most of the loyalty clubs in India are similar in their purchase schemes and privileges. The people visiting the Malls or specific store locations unlike. such as Mumbai. I would further support in other sections of the dissertation. These include the menswear. household accessories. Nagpur and Ahmedabad. with the range being constantly updated.organized retailers in India is the amount of average Walk Ins purchasing from the stores. lingerie. Hyderabad. Kolkata. Wal-Mart in US these companies haven‟t yet been able to fulfill the need of the customers towards the loyalty club.000 new designs every year. except cosmetics and perfumes. All merchandise at the store. Chennai. Complementing the shopping ambience. Café West. kidswear. and contemporaries. What began as just one store at Bangalore. contemporary designs and a plethora of products have been successfully balanced to create the ultimate shopping experience. It comes out with 35. The Westside stores have several departments to meet the varied shopping needs of customers. Loyalty Program of Organized Retailers Westside Trent LTD‟s Westside stores promise customers an international shopping experience and value-for-money. Pune. cosmetics and perfumes sections. High quality. has now expanded to other cities. New Delhi. is a coffee shop. bears the Westside label. The store enjoys a unique positioning as a 100 per cent private label merchandise store. In house brands include .
Aim: To provide customers with the finest shopping experience with enhanced rewards Eligibility: Classic Same day purchase of RS 2000 or cash payment of RS 150 YES 1 point for every RS 50 spent YES Gold Same day Purchase of RS 5000 YES 1 point for every RS 40 spent YES Enrolment Associate Membership Profile form Gourment West Special discounts at selected restaurants Treasure West Special offers from our key partners Privileges West Complimentary drinks at Café West Exclusive Shopping Hours Invites for Special events Home Delivery after Alternation ( on minimum purchase of RS 2500 ) YES YES - YES YES - YES YES YES Other Benefits: 1) Exclusive shopping hours only for members during sales 2) Advance intimation of all in-store promotions and special offers through direct mailers 3) Special discounts on dining at select restaurants .000 customers. The loyalty programme Club West has a membership of 200.Richmond and Urban Angels. who are offered services like Privileges. Name of the Loyalty Club: Club West. besides store brands Westside and Westsport. The customer loyalty program is discussed in detail in the Appendix.
SWOT Analysis on Loyalty Program Strengths Exclusive customer friendly staff Loyalty follow up through different customers is excellent Exclusivity to brand building done on televisions and media. Using brand endorsers like Yuvraj Singh is a fruitful effort. The company should also mention about loyalty club benefits No extra value added questions asked unlike other retailers Weakness Online up gradation unlike other retailers for loyalty club members not done High cost on sending mailers to different addresses Importance of card designing not taken properly compared to other retailers Opportunities Up gradation to new technology to enhance customer shopping experience The gap between customer relationship management and customer loyalty needs to be updated towards organization core values in terms of service Expansion plans to towns above 1 lakh in population could be a good option Threats Competition is catching up with the retailers in the same industry USP needs to be carefully guided in order to gain competitive and customers loyalty .
a customer earns 1 point. Other Benefits: 1) Haute and Spicy In house fashion magazines by world of fashion 2) Every outlet has a coffee island managed by Qwiky‟s 3) Discounts and exclusive invitees to get together events SWOT Analysis Strengths . These outlets together occupy 320.000 strong membership and it contributes to about 40 percent to total sales. The Inner Circle. Bangalore. nursery furniture. Home Center home furnishings. health and beauty accessories and adult gifts. Lifestyle stores have arranged their merchandise under five different sections. Chennai. with the mission to be market leader in the large format-retailing segment. One distinct advantage is that the stores leverage upon global supply chain of over 300 stores in the Middle East for the Indian operations. and Gurgoan have one each. boasts of a 240.000 square feet. While Mumbai has three Lifestyle stores. The linkage between what a customer wants and prefers If not satisfied would transfer customers to different retailers Lifestyles Lifestyle. Hyderabad.000 square feet of retail space. Shoe Mart footwear and leather accessories. For every RS 50 worth of goods purchased by the customer. Name of the Loyalty Club: The Inner Circle Aim: Provide extended value to customers who frequently shop at Lifestyle Stores Eligibility: A customer who makes a purchase of RS 2500 on a single visit or Payment of RS 150 towards the loyalty club. started operation in India in the year 1998. infant basics. Currently the company has 9 stores across 4 cities in the country. toys.000 square feet and 55. Private labels contribute about 10 percent of the total sales. the department stores chain from Dubai based Landmark Group. gifts. Baby shop kidswear. Namely Splash men‟s and ladies wear. Every 100 points collected entitles you to get a Gift Voucher of RS 100. The customer loyalty program is discussed in detail in the Appendix. Lifestyle perfumes and cosmetics. Sizes of the stores vary between 27.
The . It acquired “Superbrand” status in 2003. It covers about 600. Ray-Ban and Swatch. Most admired large format retailer at IFA 2003 and 2004 Distinctive image about Lifestyle as a brand on consumer perceptions No 1 retail company by Business World for year 2003 Customer oriented programmes like SMS. Arrow. The chain is also credited for being the largest retailer for hi end popular fashion brands like Levi‟s Strauss. Today. co branded credit cards and retail ERP. Made for each other and Shop a surprise would help walk ins in the store Weakness Manually handled loyalty program apart from the auto generated card number Nothing about the store on the Website Data feeding and sending the reports daily to the central office in Chennai needs a lot of hard work for official use Threats A consumer can redeem the same points twice in a day if he happens to walk in different Lifestyle stores on a single day Development of Customer Loyalty program yet to match with the Customer Relationship management towards the specific company goals Advantage to competitors in the form of Loyalty simplicity Opportunities Online up gradation is a necessity for Customers as well as the company The price ranges of products is for the elite class urban consumers who need extra benefits other then the simple loyalty program unlike other retailers Explore and compare the loyalty program of US retailers to out smart the rival companies Shoppers Stop A group of K Raheja‟s Shoppers Stop LTD is considered the pioneer in providing Indian consumer a taste of international class shopping when it opened its first department store in Mumbai in 1991. Zodiac.000 square feet of retail space. it is a chain of more then 16 stores across 9 cities in India. Shoppers Stop was the first retailer in the country to have bar coded garments. Pepe.
000 members. Shoppers stop has a vibrant loyalty programme First Citizen with more than 320.25% YES ( RS 100 ) YES YES 2 free ( 3rd RS 100 YES (RS 100 for ) upto 2) YES YES Cash Exclusive Golden YES Glow Cash Counter YESreserved YES parking on first cum serve basis YES YES YES Valet Parking YES . Kashish Program Partners 1% Reward Points Associate Card Regular updates Exclusive Counters Free Parking 1% - 0.company has also been recognized as “best IT user in retail by NASSCOMEconomic Times. Name of the Loyalty Club: First Citizen Aim: Experiencing the loyalty to total commitment by the company towards its customers in terms of value for money Eligibility Benefits First Citizenship Golden Glow - Silver Edge - Classic Moments RS 150 First Citizen Reward 1 Reward Point for 1 Reward Point 1 Reward Point Points ( on net every RS 34 for every RS 50 for every RS 100 purchases) purchased Purchased purchased Extra Reward points 2% on Stop!. Life.5% 0.
Free First Update YES YES YES YES YES Home Delivery of YES Alterations Out Store offers YES Exclusive Previews YES Merchandise & Sale SWOT Analysis Strengths Best IT supported Customer Loyalty program in India USP of the company being in high regard as one of the best retailers Product Authenticity of World Famous Brands in house Weakness Complicated points Systems but. very well supported by statements online Follow up to customers unlike other retailers isn‟t done to match with the standards maybe because of lack of skillful manpower in the organized retail sector Opportunities Being a market leader in the use of IT supported systems the company should also start building on new technologies like finger print customer loyalty programmes Introduction of new cards relating to college goers should be introduced to attract them to shop Smart card to be used like swipes to enhance the card exposure Threats Loosing out on urban middle level consumers to Pantaloon .
or on payment of RS 100/. It has also come up with a new concept of Studio Ivory collections of designerwear for the middle income segment. personal care. Ebony Elite Club. womenwear. household accessories. The store‟s private label. books. Expanding the stores to semi urban areas is necessary otherwise other retailers would catch up with the sales and brand presence Need to promote shoppers stop as a brand on television commercials like Westside Ebony A unit of Delhi. Besides. music. the company also has a concept bookstore called Wordsworth Ebony runs a successful loyalty programme. cosmetics.000 members. Name of the Loyalty Club: The Ebony Elite Club Aim: To provide customers with online shopping experience as well as enhance value shopping to employees Eligibility An applicant becomes eligible to apply for Elite Club Silver Membership when he/she has purchased merchandise worth RS 2000/-* or above from any Ebony store. lingerie. which has enrolled 50. kidswear. jewellery and luggage. Ebony started its first department store in October 1994. ETC contributes about 22 percent of the apparel sales.based Ebony Retail Holdings. Ebony sells menswear. The stores aim to provide customers an experience of world class merchandise at affordable prices across all the categories. perfumes.000 square feet of retail space. and by March 2004 it had eight operational stores covering 150.as enrolment fee. the Ebony store is one of the new retail companies in India. . cosmetics.
SWOT Analysis Strengths B2C business model for the Website for Customer Loyalty Strong market presence in North India Outlets specifically suited towards Market Areas Weakness To small as a retailer to expand the areas of business The brand is loosing out in identifying its customer relationship program compared to other retailers Up gradation of skillful people working in the organization necessary Opportunities With the B2C Website the company should look to expand and tie up with other web portals like India Times to gain customers Expand operations in other parts of India Threats Small retailers near by to the areas of the shop like Big Jobs in South Ext.An applicant becomes eligible to apply for the Elite Club Gold Card Membership when he/she has purchased merchandise worth RS 20. The company now operates with 37 stores in 4 distinct retail formats across the country – lifestyle (Pantaloons). In all they cover 954.001/-* within his/her Silver Card Membership tenure (2 years). LTD changed the companies name to Pantaloon Retail (India) LTD. Today. Pantaloons loyalty programme Green Card has an impressive membership of about 400.. food and grocery (Food Bazar). discount hypermarket chain (Big Bazar) and seamless mall (Central). CEO of Manz Wear Pvt.000 and the company is clearly a leader in the industry when it comes to retail . Need to introduce Category Management in the store formats Pantaloon In 1999 Kishore Biyani. Pantaloon is the largest retailing company in India in terms of value.000 square feet of retail space.
Name of Loyalty Card: Pantaloon Green Club Aim: Enhance the value of shopping through a family store Eligibility: Privileges Green Points Green Bonus Green Statements One Star Two Star Five Star 1 point for RS 1 point for RS 1 point for RS 50 40 25 NO YES YES Every 3 Months on Every 3 Months Every 3 Months on 2 ADDCards free YES YES YES Upto 90 days YES 2 Events year YES YES ADD.on.on Cards RS 100 per card Rs 100 per card ( Max 3 ) SWOT Analysis Strengths Capturing the largest market share among retailers in India .knowledge base and supply chain management practices.Card for Family 1 ADDMembers Card free Green Promotions Green Offers Green Drop Green Exchanges Green Service Desk Green Events Green News Green Channel YES YES NO Upto 60 days YES NO YES No on 3 ADDCards free YES YES YES Upto 90 days YES per 6 Events year YES YES Free per Additional ADD. which is focus area for a retail.
. The others are markets like South Ex. The malls in Delhi are mainly in Gurgoan. Pantaloon needs to upgrade Information Technology in the product in order to match with the companies customer relationship management Analysis of Questionnaire Most of the respondents go to near by areas to shop. Food Bazar and Gold Bazar The Website Recently launched has not been properly managed in terms of Customer Loyalty Program Weakness Website yet to be fully integrated with the support systems Customers only able to check points on stores from where card has been issued Follow up on customers not properly managed unlike rival firms like Westside Opportunities Marketing functions can be enhanced with the official launch of Website Modernization of Customer Loyalty Service Desk Corporate Social Responsibility can be done with the word green to enhance customer values Special Theme based launches can be done in order to generate higher sales Threats The shoppers stop customer loyalty program is very well organized.. where weekend rush is a major pinpoint. Lajpat Nagar and Sorjani nagar. Fast value creation and realization in semi urban markets Enhanced Brand image in the form Big Bazars.
As you can see majority of the loyalty programs members are through In store purchases. The respondents I asked questionnaire vary from places in Pantaloon. The Loyalty club members are less because of the number of people who frequently shop at the same store in a particular area.The preference towards the area of Mall holds the key to where people frequently shop. The criteria for Pantaloon are higher because of majority of respondent from being collected from that area. . I believe if Pantaloon as a store can look for opportunities where there is wholesome entertainment along with the Mall E.Shoppers Stop. Forum in Kolkotta it would surely add to their profits. Dlf Mall. Internet and marketing my mailers. The loyalty clubs in India are at initial stage of getting the customers. The average walk ins are high in Shoppers stop at Ansals and Gurgoan because of the wholesome entertainment in the location of the store. There are similar programs of every organized retailer for membership. Ansals. The success of a store is concentrated towards the area of the place and the brand value it holds in terms of the changing consumer lifestyles.g.
I think this can be a Unique Selling Preposition for pantaloon stores all over India. somehow it isn‟t able to cater the services of the respondent who is at an age where he or she is doing her graduation or about to start his or her career. . All the loyalty programs provide similar offers.Most of the people who frequently shop at the same stores are members of two or more loyalty club programs. Most of the common is being Shoppers Stop and Pantaloon. The respondents who were members of pantaloon loyalty club were 24. Westside stores follow up is very punctual in terms of their reminders to their selected customers. the best part of the people is the kind of promotion offers differs from the rivals. Most of the time the shoppers aren‟t interested in any sort of loyalty program because it doesn‟t add to much to their value. Lifestyles as part of others have recently started their loyalty program in Gurgoan. They invite you to different events depending upon your membership relating to the card you hold. Shoppers Stop is most preferred loyalty club with members getting updates and knows how about the store regularly. But. The criteria for the shopping stores to have a loyalty program is to increase the frequent purchases of the store but. Pantaloon loyalty program isn‟t followed in terms of its CRM processes unlike Shoppers Stop. The graph clearly shows that the staff of pantaloon is very good and helpful in terms of the services. Unlike most of the shoppers people aren‟t satisfied enough with the kind of reward structure the company provides.
6) The average number of walks ins in a store is generally on the place of the mall. As you can clearly see from the above graphs the loyalty club members are usually high-end A1 customers who frequently shop at a particular place. 3) Shoppers Stop is the number one retailer whose Customer loyalty program is very well integrated compared to the other retailers. . there is a need for all the loyalty clubs to start their online ventures in relation to their CRM process. 7) The CRM strategies of all the organized retailers are still very less integrated in terms of the international players like Wal. From a customer‟s stand he or she would only be differentiated by the brand name of the company.Mart and other multi chain outlets in the World. 8) I think the changing consumer patterns are not tapped by the retailers for the Customer loyalty programs 9) Banks provide cash back credit card in form of an extended discount to various organized retail outlets. I think that this suggests the loyalty club members are technosavy so.Out of the 31 respondents most of the people aren‟t willing to be a member of any loyalty club as such probably because of shopping at different places in different areas. 2) Most of the organized retailers in India are offering similar services on customer loyalty programs. Most of the people are working executives and businessmen who find ambience and latest fashions the key dominants to shop and enroll for the loyalty program. One of the mains reason being said by few customers is they don‟t add to the overall value to their purchases. Findings from Questionnaire 1) People respond better to Internet mailers then courier. 5) Lifestyle is at a initial phase of launching the Customer loyalty program. 4) Pantaloon as a store appeals more to the working class and family oriented people especially in Gurgoan.
double points on off days etc. The Indian retailing industry is just opening up to the world. The company needs to overall upgrade the website and . 7) Time needed to study the CRM Process along with the loyalty programs of the retailing industry 8) In relation to customer loyalty survey the organization also needs to do employee loyalty survey which would form a base to an CRM process 8 9 Conclusions And Recommendations 1) To study and analyze the gaps if any in the customer relationship strategy of Pantaloons in India Limited The gap between the consumers and the company CRM is not very wide. the companies should start looking for means to attract people coming in at the store in the form of extended shopping hours.10)The Reward structure needs a revision to tap in more customers so that the profit margins can be increased 11)Overall. Though my study of the loyalty program is too early I think the company can cater to the customers in a more convenient way. I think in the coming years we would be able to see a significant development in this area. Limitations of the Project 1) Most of the questionnaire filled by the customers are suppose to be a loyalty club member of two or more clubs 2) Organized retailing in India as an industry has just started to prosper with the emergence of FDI in retailing and emergence of shopping malls in India 3) The loyalty programmes of organized retailers mentioned in the project are very similar compared to international loyalty programs 4) The CRM implementation in retail has just been started in retailing in the form of supplier goods purchase and customers 5) The survey is too small to predict the initial reaction of customers towards different loyalty clubs 6) The organized retailing in India is just 2% of the total retailing compared to the other parts of the world. 12)The pantaloon store should have a small area specified to the entertainment segment inside the store in the form of contest etc.
That is. The name itself of green can be identified with increasing awareness about plants in the world. 3) To assess the opportunities of strategic alliances to generate traffic customer loyalty Traffic at the store can only be generated if the location and the facilities at the nearby stores are convenient.also the customer service desk at the store. I would recommend the following: a) Have in store space for counters to entertain people which can act as a crowd pulled and also jump sales b) Upgrade the website and make Online purchases available to start c) Upgrade the software of Siacom so that if on a given day a store has double points giving to customers it can fulfill the needs d) The track of data purchased by the customers need to follow up with special invitees e) Marketing of the best loyalty program in India could be beneficial for the store and also increase the profits 2) To study and analyze the customer loyalty program of Pantaloon Retail India Limited and compare with other retail outlets The Pantaloon Loyalty program is similar to all the organized retail outlets in India with the only difference of Adding points during the sale period. A person who is a privileged customer has to benefit from the purchases he or she makes at the store. I think this would prove a reason for people to buy and also cater to the services towards the environment. I think the frequency of the purchases should be increased. combinations of a wholesome entertainment along with the shopping experience. The tie-ups with Bank Credit Cards would be handful but. . One way to increase the traffic would be to have in store display counters of games in the store that would always keep a shopper wanting to walk around the stores more. I think its too early to predict the future of the shopping loyalty programs in India. it should also help the company to get a automatic privilege customer. The only recommendation I have apart from the things mentioned above is to identify the club with some social cause.
So where do you start. As the loyalty program director of large retail outlets suggests “future of a successful loyalty program as a transition from mass customer marketing to a more personalized in store experience and one on one dialog with our best customers”. If you are thinking of revising you current loyalty programs you need to ask your loyal shoppers for input on program design that can yield valuable insights early on data driven segmentation along the multiple dimensions can point to a wealth of new tactics for you marketing strategy. Loyalty programs can even be invisibly. Overall I think. if necessary. But lifestyle. I think they should also do a organizational employee survey in relation to their attachment towards the organization and also integration of new and upcoming technology in the organization. identify and enroll customers with minimal effort on the customers part build customer knowledge incrementally and across all touchpoints and increasingly sharpen their marketing messages to speak to the specific needs of both card members and non card members. In the end. Retailers will need to respect privacy.The retailers also need to see how are their employees integrated to their systems. A store cannot aim to achieve much by just issuing a numbered card and rolling out points. Program membership is only means of getting at loyalty and not everyone will respond to your program. Customer Experience Management is an Extension to CRM. the loyal customers should get special treatment regardless of membership in the program. It is the collection and analysis of customer data that will enable the company to implement this futuristic vision. complementary goods or convenience moves others. The Customer Loyalty and the CRM strategies in India should lead to a new developing concept about Customer Experience Management. Future of Loyalty Programs in India Think beyond the card You cannot expect good results from implementing a loyalty program with a standard activity and rewards aimed at everyone.(see Appendix : where retail executives want to spend money to improve their loyalty programs) Think beyond the price It is an inescapable fact many customers are moved by price. Research has shown that although price is an important determinant for a customer choosing among . retailers must strategize loyalty for all their consumers.
enabling marketing to be geared entire household needs. it also is about gaining valuable intelligence on how customers think and act. The prerequisite of moving beyond this segment is to understand your customer deeply. A single retailer concurrently serves the needs of different consumer types. quality. Retailers can now ask: what is the value of each customer that you cater to or that you might cater to? It is important to remember that a loyalty program is not just about rewarding loyal customers.retailers. merchandise selection. Conversely. low value customers might be more opt to purchase items if they are discounted (hard benefits). you can push the right lever for the right customers. analytic has evolved to a stage where customer micro segments can be identified and acted upon to optimize market spend (see Appendix: Evolution of analytic technology). location and loyalty programs are also significant factors. a leading high end retailer was able to create 294 distinct segments within their loyalty programs just by blending three dimensions of customer information. ( see Appendix Multi dimensional customer insights lead to tiered loyalty marketing ) taking that point of departure the retailer selected a set of marketable segments that would receive the most enticing mix of benefits hard and soft and targeted their interests. Advanced analytic also allows for integration of household data in profiles and transactions. Moreover. through similarity and consistency analyses. Additionally. If you understand your customers. Next generation loyalty programs are beginning to take that the use of data not only for personalizing loyal shopper‟s experiences. if there are other appeals to a particular store. They are making loyalty data actionable both downstream (customization) and upstream (core marketing strategies). it becomes possible to tweak the benefits and promotions to optimize the appeal of the store space to as many consumers as possible. across to store design. Next generation programs will offer tiered benefits according to deep understanding of customer segments using advanced analytic tools. . Moreover. branding and merchandising. store cleanliness. High value customers might not mind paying more for a certain product. you can identify which benefits turn off certain customers. You need to invest in understanding attitudes and behavioral drivers and tune programs so that they speak differentially according to different customer needs. retailers can take into consideration customer purchasing behavior and make predictions about future purchases. Think beyond the price By leveraging advanced analytic.
The power to acquire . These innovations have happened more often in non-retailing sectors. since employee fraud has been a drain on some programs. Think beyond the program Loyalty programs should not be relegated to just another departmental activity. shopping guides and comparison sites. as purchases spokes people influencers. Involving employees to talk to consumers and share recommendations is another. The next generation. blogs. managed (to bolster the customer experience through every active and passive touchpoint) and leveraged (by using data to inform more intelligent initiatives). They need to be grounded as in a firm wide commitment to customer centricity. Retailers are experiencing the age of informal spokespeople. broadly understood (by management down to sales clerks). increase their share of voice in the market and thereby attract new customers. retail loyalty programs will be able to leverage these newer opportunities aiming to turn loyal customers into ambassadors for the retailer. family and co-workers. An innovative program can also attract new customers. Some retailers are experimenting with involving employee more integrity into the program. When you consider that happy employee is by far a company‟s greatest asset of advocacy. loyalty programs should take into account all of the company‟s strengths and leverage them whatever and when ever possible all employees from the CEO down to the sales representatives of the company. Investment in these safeguards is well worth it. Setting up a program that provides incentives for current members to enroll new members is one way to increase such buzz. Accordingly. One of caveat is that the inclusion of employees in the program will require instating anti fraud protections.Think beyond retention More loyalty-marketing experts really agreed that a loyalty program is geared towards retaining customers. where rewards program are a point of competitive differentiation. who rely on peer-to-peer communication. Innovative loyalty programs attract new members who fall into the following two groups: 1) Entirely new customers 2) Existing customers who are now visible as a result of program enrollment These members in turn influence friends. online chat rooms. Positive publicity in this environment can be a powerful marketing force.
Roger D. All India Publishers. Viva Books. 1999 Lucas George H. Bitner Mary Jo. Gilliam Collin. Marketing Management. Jr. Third Edition. Retailing. Second Edition. 2000.Hill. McGraw.. Strategic Management.Strategic Marketing. Dryden.and retrain customers can be significantly strengthen by ensuring that employees at every level enthusiastically support the loyalty program... Blackwell. Retail Management. Prahalad.S. Services Marketing.K. James F. First Edition 1997 Hasty Ron. Reprint 1986 Zeithaml Valarie A. Millennium Edition. 2000 Ries al. International Edition. Bush Robert P. 1996 Dunne Patrick. Prentice Hall India. Miniard. Paul W.Hill. Third Edition. Marketing Warfare. C.. Lusch Robert F. Consumer Behavior . Strategic Marketing Management. 1997 Wilson Richard M. Engel. Plume. Trout Jack. Gresham Larry G. McGraw. Reardon James. 1998 Hamel Gary. 1999 Miller Alex. Competing for the Future.. International Edition. Retailing. 10 Practical Steps for Retailers 1) 2) 3) 4) 5) 6) 7) 8) Look beyond your own industry Initiate a self critical discovery process Start asking questions about customer value Start talking to people across the organization Generate ideas about enhancing the customer experience Experience all the different customer touchpoints personally Ask customers what type of benefits they most desire Ask yourself ten things you want to get out of the relationship with your different tiers 9) Talk to customer loyalty experts 10) Dare to invest 11) Books Bibliography Kotler Philip.
com/ smmar-apr2/strategic_iss.ksa-technopark.com www.com .in/resources/whitepapers/bidw_bretail.com www.com/dyn/ gdh/eyp/Business_Services/Retailing/ www.shoppersstop.com www.webmasterworld.Magazines and Newspapers A&M The Hindu Business Line Economic Times Smart Inc.htm www.htm www.indiaonestop.com/Retailing_in_India www.html www. Business Week Pitch USP.Age Business World Harvard Business Review The Economist Franchise Plus Images Retail Websites www.retailyatra.pantaloon.com www.com/forum22/2874.pdf www.ebonyclick.agencyfaqs.com/map/prod/1035097.com www.loyaltylogic.pwcglobal.etstrategicmarketing.edu/mktg11/art_6_oct.com/retailing.pdf www.indiainfoline.htm www.trade-india.wessidestores.marketresearch.htm www.com/bisc/reta.lbsim.com www.com www.com www.wipro.euromonitor.co.
3.g.g. Sarojini Others Specify ______________ Q.4. Gurgoan.2.No. As part of a Final Year Curriculum I would be grateful if you help me to fill this questionnaire. www. Q. Which shopping stores do you like to shop? Ebony Pantaloons Shoppers Stop Westside Others Specify _______________ Q. Where do you like to shop? Malls E.com Appendix 1) Questionnaire Dear Respondent. I am a Marketing Student from Skyline Business School. 4 to 7 Q. Ansals Markets E.lifestylestore. Are you a member of any Shopping stores loyalty Programs? Yes No If No.1. Lajpat Nagar. skip Q. How did you come to know about the loyalty club? Ads Friends In store Internet Ebony Pantaloons Shoppers Stop Westside .
6. Which Shopping club are you a member? How long have you been a member? Rate your Preference towards the clubs you favor? Rate 1 to 5.5.Others Q. 1 being the most preferred Time Been a Member Rating < 1 year Ebony < 1 year Pantaloons < 1 year Shoppers Stop < 1 year West side < 1 year Other Specify ________ > 1 years > 1 years > 1 years > 1 years > 1 years Q. What offers do you get by those clubs? Discounts Promotions Points Ebony Pantaloons Shoppers Stop Westside Others Gifts Others .
Q.7.9.8. privileges Redemption options Sense of Bonding with Staff Value Added Services of the Store Other Preferences Q. Would you consider being a part of a Loyalty Club? Yes No ______________ .If you are a member of Pantaloon loyalty club in terms of the services if its your preferred store Poor Average Ok Good Excellent 1 2 3 4 5 Reward Structure Promotion offers Schemes. Why aren‟t you a part of any Shopping Store loyalty Program? Minimum Requirements Don‟t shop frequently at the same store Not Interested Q.
Name: ________________________ Gender: Male Female 2) Distribution of Mall Space in India Source: Franchise Plus 29 .
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