MBA Project Report

Dewan Jakaria Ahmed

MBA,BBA (Marketing)
Leading University, Sylhet

Jakaria Ahmed
 PROJECT REPORT
ON

Customer Relationships Management in Retailing

(A study on clothing Business)

This report is submitted as the partial fulfillment of MBA program

This report is submitted as the partial fulfillment of MBA program

Project Supervisor
Mr. Shamsu Uddin Shakib

Lecturer of Marketing

Dept. of Business Administration

Leading University, Sylhet

Submitted By
Dewan Jakaria Ahmed

ID-1101010735
Major in Marketing

MBA, Dept of Business Administration

Leading University, Sylhet

Submission Date
February 07, 2012
 Letter of Transmittal
07 February, 2012

To

Mr. Shamsu Uddin Shakib

Lecturer & Project Supervisor

Department of Business Administration

Leading University, Sylhet

Subject: Submission of project report

Sir,

With respect I am jakaria seeking your kind attention regarding this report.I have prepared
my report on Customer Relationship Marketing in Retailing ( based on clothing business).By
analyzing the retail market practically and using various tools I tried to prepare my report on
my topic. I sincerely followed your guideline for preparing my report.

Now, my project report ready for submission. I hope this report will meet your requirements.
So kindly accept this report and oblige thereby.

Obediently yours,

Jakaria Ahmed
_______________________________________

Dewan Jakaria Ahmed

ID- 1101010735

MBA (Major in Marketing)

Department of Business Administration

Leading University, Sylhet

 Certificate of Completion
TO WHOM IT MAY CONCERN

This is to certify that, Dewan Jakaria Ahmed, ID# 1101010735,MBA, Department of

Business Administration of Leading University, Sylhet- has successfully completed his
project work on ‗Customer Relationship Management in Retailing(based on clothing
business)‘ under my supervision. As an integral part of the MBA program, after completing
his credits in class activities, Dewan Jakaria Ahmed had been under my direct supervision
during his project work time.

During the project work period, Dewan Jakaria Ahmed has taken and carried out my
instructions to prepare the project report. He has collected the necessary information and
undergone through the qualitative and quantitative studies. After completing the, studies he
has prepared this report.

In this regard, I would also like to certify that, Dewan Jakaria Ahmed project work and report
is exclusive and representative as per my knowledge. He has earnestly worked hard in this
regard.

I wish every success to his life.

_________________________________

Mr. Shamsu Uddin Shakib

Lecturer of Marketing

Department of Business Administration

Leading University, Sylhet

 ACKNOWLEDGEMENT

I would like to acknowledge the guidance and effort of Internship and placement committee
for arranging such a nice program for co-relating theoretical learning with real life situation.
It‘s a pleasure to convey my heartiest gratitude and greeting to my honorable supervisor Mr.
Shamsu Uddin Shakib, Lecturer of Marketing, Department of Business Administration,
Leading University. Without his co-operation it would have not been possible to prepare the
report into a nice ending.

I would also like to acknowledge and thanks the following personnel who has extended their
whole-hearted co-operation for preparing the report.

Mr Md Foysal ahmed and Saleh Ahmed the owner of Saleh cloth store and readymade corner
for their kind guidance and support during my project work.
Mr Khalil Ahmed the owner of Khalil Readymade and Mr Mintu the manager of Alahi cloth
for cordially helping in data collection and preparing my project.
I am also owe to Mr Pervez Ahmed and Mohi Uddin for earnest co-operation.
Finally, I would like to convey my heartiest thanks and gratitude to a ll of my teachers,
friends, and many others who extend their support to prepare the report.
 PREFACE

We shall be benefited of by our education if we can effectively apply the institutional

education in practical fields. Hence, we all need practica l learning to apply theoretical
knowledge in real world. This report is not only a report but it is the reflection of my practical
experience in retail market. I tried to present here those things which I practically
encountered and closely observed in real market.

I tried my best to conduct effective study by collecting current data. Even though if mistake
appears, it is truly undesirable. So I would request to look at the matter with merciful eyes.
 Executive Summary
This report has been made with my practical knowledge of how retailers manage customer
relationships. Customers are the king in retail business and retailer acts as a facilitator to
fulfill the needs of their customer (king).
Retailers emphasize mainly on CRM to create loyal customer. Loyal customers are the
maximum profit generating source of retailer. CRM enable retailers to identify their best
customers and manage conflicting customer. Effective CRM implementation is possible if all
the units of a retailer act simultaneously to ensure better service and satisfy customer
uniquely. Proper allocation of resources and strategies to retain loyal customer are integral
part of CRM.
 TABLE OF CONTENTS

Title No Chapter 01-Scope,Objectives,Methodology and P.N-01-03

Limitations

1.0 Scope of the study 01

1.1 Significance of the study 01

1.2 Objective of the study 01

1.3 Research Methodology 02

1.4 Limitations of the Report 03

Chapter – 02 (Theoretical Framework) 04-12

2.0 Introduction 04

2.1 History of CRM 05

2.2 Why Customer Relationship Management? 06

2.3 Ways to keep customer for life 06

2.4 Things need to done for CRM 07

2.5 Key CRM principles 08

2.6 CRM programs 09

2.7 Architecture of CRM 10-11

2.8 Tools needed for CRM 12

Chapter – 03 (CRM in Retailing) 13-26

3.0 What is retailing? 13

3.1 Necessity of CRM in retailing 13

3.2 How retailers benefitted by CRM 14

3.3 Satisfaction drivers for building relationships in retailing 15

3.4 Process of CRM in retailing 16-26

3.5 Collecting Customer data 16-17

3.5.1 Customer database 16-17

3.5.2 Approaches for collecting information 17

3.6 Analyzing customer data and identify target customer 18-20

3.6.1 Data mining 18

3.6.2 Market basket analysis 18

3.6.3 Identifying market segment 18

3.6.4 Identifying best customers 18-20

3.6.4.1 Lifetime value 19

3.6.4.2 Customer pyramid 19

3.6.4.3 RFM (Recency, Frequency, Monetary)Analysis 20

3.7 Developing CRM programs 21-22

3.7.1 Retaining the best customers 21

3.7.2 Converting good customers into best customers 21-22

3.7.3 Dealing with unprofitable customers 22

3.8 Implementing CRM process in retailing 23-26

3.8.1 Critical success factor implementation of CRM in retailing 24

3.8.2 Reasons for CRM implementation failure in retailing 25

3.8.3 Suggestion for successful implementation of CRM in 26

retailing

3.9 Conclusion 26

3.10 References 27
1.0 Scope of the Study
The scope of this report is to analyze the customer relationship management (CRM) in
retailing (clothing business) from the stages of collecting customer information to the
successful implementation.

1.1 Significance of the study

The CRM (customer relationship management) is an integrated effort to strengthen the

network of relationship for the mutual benefit of both the retailer and customer. The biggest
management challenge in the new millennium of liberalization and globalization for a
business is to maintain good relationship with the king – the customer. This study is of great
significance because

 A 5% increase in the customer retention will increase the profit up to 125%.

 It costs five times more to attract a new customer than to serve an old one.
 20% of the company‘s loyal customers account for the 80% of its revenues.
 To study on customer relationship management has enabled me to know about the
CRM practices adopted in the retail industry (clothing business).

1.2 Objectives of the study

 To study the current practices of CRM in retailing.

 To find out the impact of CRM on the profitability of the clothing business.
 To study the factors affecting the CRM practices.
 To study the methods and tools for implementing CRM in retail sector (clothing
business)
 To study the necessity of CRM in retail sector as well as suggesting them the
ways for successfully implementing it.
1.3 Research Methodology

A research design is simply a plan for study in collecting and analyzing the data. It helps the
researcher to conduct the study in an economical method and relevant to the problem.

Research methodology is a systematic way to solve a research problem.

1.3.1 My research design for CRM analysis in retailing

The study conducted here is exploratory and descriptive. I also closely observed the retail
market so observational technique played vital role in my study.

1.3.2 Collection of the data

There are two types of data I collected for my study.

Primary data – primary data is that data which is collected for the first time. These data are
basically observed and collected by the researcher for the first time. I have collected primary
data by asking questions.

Secondary data – secondary data are those data which are primarily collected by the other. I
used secondary data to obtain structure of doing my study. I also used existing literature to
clarify CRM concept.

1.3.3 Data collection

Data is collected t via using questionnaire.

1.4 Limitations of Customer Relationship Management
 By studying a few retail market it is hard to assume the overall CRM policy used in
retail industry.
 Information gathered from retailers may not fully truthful because no retailer shows
their weakness.
 Lack of retailer knowledge about modern CRM concept.
 Time constraint is unavoidable limitation of my study.
 As few works has been done earlier in this regard so scarcity of secondary data is also
there.
 Inadequate disclosure of tactical information by retailer is also the problem.
2.0 Introduction
The biggest management challenge in the new millennium of liberalization and globalization
for a business is to serve and maintain good relationship with the king – the customer. In the
past producers took their customers for granted, because at that time the customers were not
demanding nor had alternative source of supply or suppliers. But today there is a radical
transformation. The changing business environment is characterized by economic
liberalization, increasing competition, high consumer choice, demanding customer, more
emphasis on quality and value of purchase etc.

All these changes have made today‘s producer shift from traditional marketing to modern
marketing. Modern marketing calls for more than developing a product, pricing it, promoting
it and making it accessible to target customer. It demands building trust, a binding force and
value added relationship with the customers.

“Customer relationship management (CRM) is a business strategy to acquire and manage the
most valuable customer relationships. CRM requires a customer-centric business philosophy and
culture to support effective marketing, sales and service processes. CRM applications can enable
effective customer relationship management, provided that an enterprise has the right
leadership, strategy and culture.”

The process of developing a cooperative and collaborative relationship between the buyer and
seller is called customer relationship management shortly called CRM.
2.1 History of CRM

Customer Relationship Management (CRM) is one of those magnificent concepts that

swept the business world in the 1990‘s with the promise of forever changing the way
businesses small and large interacted with their customer bases.

In the beginning…

The 1980‘s saw the emergence of database marketing, which was simply a catch phrase
to define the practice of setting up customer service groups to speak individually to all of
a company‘s customers.

Advances in the 1990’s

In the 1990‘s companies began to improve on Customer Relationship Management by

making it more of a two-way street. Instead of simply gathering data for their own use,
they began giving back to their customers not only in terms of the obvious goal of
improved customer service, but in incentives, gifts and other perks for customer loyalty.

True CRM comes of age

Real Customer Relationship Management as it‘s thought of today. Instead of feeding

information into a static database for future reference, CRM became a way to
continuously update understanding of customer needs and behavior. In recent years
however, several factors have contributed to the rapid development and evolution of
CRM. These include: -

 The growing de- intermediation process

 Advances in information technology
 The growth in service economy.
 The total quality movement.
 Changing Customer expectations
 Intense competition.
 Retaining customers is less expensive than acquiring new ones.
 Necessity to have global account management for the customers.
2.2 Why – customer relationship management?

 A satisfied customer in 10 years will bring 100 more customers to the company.

 It costs 5 times more to attract a new customer than to serve an old one.

 20% of the company‘s loyal customers account for 80% of its revenues. (Pareto‘s

principle).

 The chances of selling to an existing customer are 1 in 2, the chances of selling to a

new customer are 1 in 16.

2.3 Ways to keep customers for life

1. Every part of the company‘s marketing effort should be geared towards building lifetime
relationships.

2. People want to do business with friendly people. To have effective relations a friendly
attitude must permeate in the organization.

3. Information technology developments should be positively used to serve the customers.

4. The company should always be flexible to bend its rules and procedures in the client‘s
favor.

5. The company should communicate with its customers even when it is not trying to sell
something.

6. The company can communicate and develop stronger customer bonding by providing
financial and social benefits.

7. The company should try to know all its customers including their lifestyles, hobbies, likes
and dislikes etc.

8. The company should make it a point to deliver more than what is promised.
2.4 Things need to done for CRM

A good CRM program can improve customer service by facilitating communication in

several ways :

 Provide product information, product use information, and technical assistance that
are accessible 24 hours a day, 7 days a week.
 Identify how each individual customer defines quality, and then design a service
strategy for each customer based on these individual requirements and expectations.
 Provide a fast mechanism for managing and scheduling follow- up sales calls to assess
post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and
repurchase frequencies.
 Provide a mechanism to track all points of contact between a customer and the
company, and do it in an integrated way so that all sources and types of contact are
included, and all users of the system see the same view of the customer (reduces
confusion).
 Help to identify potential problems quickly, before they occur.
 Provide a user- friendly mechanism for registering customer complaints (complaints
that are not registered with the company cannot be resolved, and are a major source of
customer dissatisfaction).
 Provide a fast mechanism for handling problems and complaints (complaints that are
resolved quickly can increase customer satisfaction).
 Provide a fast mechanism for correcting service deficiencies (correct the problem
before other customers experience the same dissatisfaction).
 Use internet cookies to track customer interests and personalize product offerings
accordingly.
 Use the Internet to engage in collaborative customization or real-time customization.
 Provide a fast mechanism for managing and scheduling maintenance, repair, and on-
going support (improve efficiency and effectiveness).
 The CRM program can be integrated into other cross- functional systems and thereby
provide accounting and production information to customers when they want it.
2.5Key CRM principles

2.5.1 Differentiate Customers

All customers are not equal; recognize and reward best customers disproportionately.
Understanding each customer becomes particularly important.

What CRM needs to understand while differentiating customers is:

- Sensitivities, Tastes, Preferences and Personalities

- Lifestyle and age
- Culture Background and education
- Physical and psychological characteristics
2.5.2 Differentiating Offerings
 Low value customer requiring high value customer offerings.
 Low value customer with potential to become high value in near future.
 High value customer requiring high value service.

2.5.3 Keeping Existing Customers

Grading customers from very satisfied to very disappoint should help the organization in
improving its customer satisfaction levels and scores. As the satisfaction level for each
customer improves, so shall the customer retention with the organization.

2.5.4 Maximizing Life time value

Exploit up-selling and cross-selling potential. By identifying life stage and life event trigger points
by customer, marketers can maximize share of purchase potential.
2.5.4 Increase Loyalty
Loyal customers are more profitable. Any company will like its mindshare status to
improve from being a suspect to being an advocate. Company has to invest in terms of its
product and service offerings to its customers.
2.6 CRM Programs

2.6.1 One-to-one Marketing

Meeting and satisfying each customer‘s need uniquely and individually. In the mass markets
individualized information on customers is now possible at low costs due to the rapid
development in the information technology and due to availability of scalable data
warehouses and data mining products. By using online information and databases on
individual customer interactions, marketers aim to fulfill the unique needs of each mass-
market customer. Information on individual customers is utilized to develop frequency
marketing, interactive marketing, and aftermarketing programs in order to develop
relationship with high- yielding customers.
2.6.2 Continuity Marketing Programs

Take the shape of membership and loyalty card programs where customers are often
rewarded for their member and loyalty relationships with the marketers. The basic premise of
continuity marketing programs is to retain customers and increase loyalty through long-term
special services that has a potential to increase mutual value through learning about each
other.

2.6.3 Partnering Programs

The third type of CRM programs is partnering relationships between customer and marketers
to serve end user needs. In the mass markets, two types of partnering programs are most
common: co-branding and affinity partnering.
2.7 Architecture of CRM

There are three parts of application architecture of CRM:

 Operational - automation to the basic business processes (marketing, sales, service)

 Analytical - support to analyze customer behavior, implements business intelligence
alike technology
 Collaborative - ensures the contact with customers (phone, email, fax, web, sms, post,
in person)

2.7.1 Operational CRM

Operational CRM means supporting the "front office" business processes, which include
customer contact (sales, marketing and service). Operational CRM provides the following
benefits:

 Delivers personalized and efficient marketing, sales, and service through multi-
channel collaboration.
 Enables a 360-degree view of your customer while you are interacting with them.
 Sales people and service engineers can access complete history of all customer
interaction with your company, regardless of the touch point.

The operational part of CRM typically involves three general areas of business:

3 Sales force automation (SFA)- SFA tools are designed to improve field sales
productivity. Key infrastructure requirements of SFA are mobile synchronization and
integrated product configuration.
4 Customer service and support (CSS) - CSS automates some service requests,
complaints, product returns, and information requests.
5 Enterprise marketing automation (EMA) - EMA provides information about the
business environment, including competitors, industry trends, and macro-environmental
variables
2.7.2 Analytical CRM

In analytical CRM, data gathered within operational CRM and/or other sources are analyzed
to segment customers or to identify potential to enhance client relationship. Examples of
Campaigns directed towards customers are:

 Acquisition: Cross-sell, up-sell

 Retention: Retaining customers who leave due to maturity or attrition.
 Information: Providing timely and regular information to customers.
 Modification: Altering details of the transactional nature of the customers'
relationship.

Analysis of Customer data may relate to one or more of the following analyses:

Contact channel optimization, Contact Optimization, Customer Acquisition / Reactivation /

Retention, Customer Segmentation, Customer Satisfaction Measurement / Increase, Sales
Coverage Optimization, Fraud Detection and analysis, Financial Forecasts, Pricing
Optimization, Product Development, Program Evaluation, Risk Assessment and Management

Data collection and analysis is viewed as a continuing and iterative process. Therefore, most
successful analytical CRM projects take advantage of a data warehouse to provide suitable
data.

2.7.3 Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal,
letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels.
It is a solution that brings people, processes and data together so companies can better serve
and retain their customers. The data/activities can be structured, unstructured, conversational
and/or transactional in nature. Collaborative CRM provides the following benefits:

 Enables efficient productive customer interactions across all communications

channels
 Enables web collaboration to reduce customer service costs
 Integrates call centers enabling multi-channel personal customer interaction
 Integrates view of the customer while interaction at the transaction level
2.8 Tools Needed for CRM

2.8.1 Customer database

A good customer information system should consist of a regular flow of information,
systematic collection of information that is properly evaluated and compared against different
points in time, and it has sufficient depth to understand the customer and accurately anticipate
their behavioral patterns in future. The customer database helps the company to plan,
implement, and monitor customer contact. Customer relationships are increasingly sustained
by information systems. Companies are increasingly adding data from a variety of sources to
their databases. Customer data strategy should focus on processes to manage customer
acquisition, retention, and development.

2.8.2Data Mining for CRM: Some Relevant issues

Data mining is an important enabler for CRM. Advances in data storage and processing
technologies have made it possible today to store very large amounts of data in what are
called data warehouses and then use data mining tools to extract relevant information. Data
mining helps in the process of understanding a customer by providing the necessary
information and facilitates informed decision- making.
3.0 What is retailing?
Retailing is the business activity that involves selling products/services to customers for their
non-commercial, individual or family use. Normally, retailing is the final stage of the
distribution process.

CRM (Customer Relationship Management) in retailing aids to increase efficiency, serves to

aid the sales unit in all of its efforts, manages to boost sales, and fundamentally contributes to
the overall development of the business. It also manages to work towards organizational
goals. This is achieved through a concise study of potential customers.

Their preferences are taken into consideration and used to coordinate and implement a
customer centric business strategy that focuses primarily on the customer, yields to recording
the importance of his ideas and suggestions and results in increased customer retention.

3.1 Necessity of CRM in retailing

Retailer use CRM concept to the following reasons that I mainly found from my
observation:-

 To know their customers‘ needs and wants in customized way.(Shopkeepers put in

mind what their loyal customer seek from them and what are the tastes and
preferences of a particular customer)
 To deliver the desired products quickly in the hands of their customer (call the
customer when a desired product reached in shop or sometimes send it to customers)
 I also found when any new products or design come in shop retailers inform it to
specific customer, sometimes they inform customer about if any products price falls
or any discount is available (for promotional activities)
 By applying CRM concept a retailer can know who most profitable customer and who
is less profitable and thus can maintain relation with those who provides best value.
 By continuously maintaining communication with customer retailer ca n know their
changing demands and can bring the innovative products.
3.2 How retailer benefited by CRM

If a retailer becomes able to maintain strong relationship with customer then it generate a
numbers of benefit for them which includes:-
 Retailer can generate maximum sales by repetitive purchase of loyal customer.
 By uniquely delivering the desired products they can best meet the needs and
requirements of their customer.
 Greater sales ensure maximum profit level.
 Whenever loyal customer frequently visit the store that time retailer can infirm them
about other additional products and sell it (cross-selling).
 By applying CRM concept retailer can ensure customer satisfaction which then leads
to positive word of mouth communication and thus retailer reputation and new
customer base increase.
 By using CRM concept retailer can protect customer in competition( loyal customer
stay close to retailer even if they don‘t get appropriate products or service because of
relation)
3.3 Top satisfaction drivers for building strong relationships in Retailing

In order to satisfy a customer and retain them longer time a retailer must need to know what
customer are seeking from retailer. What drives for their satisfaction? I analyzed following
factors that a customer always emphasize:-

• Person-to-person experience — the store has helpful, friendly, knowledgeable employees

who anticipate customer needs and exceed customer expectations.

• Store experience —the store is cleaned, well-designed, organized, adequately stocked with
quality merchandise and provides "fun" experiences.

• Price and value —the price that customers pay for goods is matched by the perceived value
that they receive for making the purchase.

• Marketing and communications —the store's promotions are well-communicated, easy to

redeem and valuable to customers.

• Data integration and analytics —the store provides the same product selection and product
Information across all sales channels, and uses information from a consumer's past
purchases to provide better service.

To build enduring customer relationships, retailers also need to provide shopping experiences
that are consistent with consumer desires and expectations. Things that are needed to ensure
shopping experience are:-
• Ease-of-use —Shopping is hassle- free; the retailer makes the customer feel welcome; the
retailer meets all customer expectations.
• Strong association —Retailer is top-of-mind; the customer feels good recommending the
retailer to family and friends; the customer feels that the retailer provides the best value
compared to competitors.
• Self-esteem —Shopping gives the customer a sense of familiarity; the customer believes
shopping reflects their good judgment; shopping makes the customer feel like they "fit in."
• Price relationship —The customer enjoys taking advantage of special offers and low prices.
3.4 Process of CRM in retailing
CRM is an iterative process that turns customer data into customer loyalty through different
types of activities. Levy and Weitz described CRM in retailing through a systematic process-

I analyzed the retail market and CRM in retailing (clothing business).This report is described
on the basis of this model. I tried to describe the applied CRM in retailing business.

The process of CRM in retailing is thus described below sequentially-

3.5 Collecting customer data

The first step of CRM is constructing a customer database. This database is referred to as a
customer data warehouse, contains all the information the firm has collected about its
customers and is the foundation for subsequent CRM activities.

3.5.1 Custome r Database

Ideally the database contains the following information:

Histories of purchases-retailer keep the information of the purchases made by particular

customer. This information helps retailer to know about customer.
Customer contact-I found that almost every retailer keep the information of customer in order
to make future communication. Usually retailers seek customer address and phone numbers.

Customer preferences-retailer keeps information of customer preferences and choices. From

my study I found that retailer keep enough information about customer selection of cloths,
the regional preferences of cloths, information of customer preferences of quality and design.
Based on these preferences retailers often contact with customer whenever a new design or
changing pattern comes in market.

3.5.2 Approaches for collecting information

Asking for information-In general I saw retailer ask customer to provide their address and
contact number whenever they make purchase.

Using frequent shopper card and credit card information-This is often used by branded retail
chain store to collect information whenever a customer enroll in a loyalty program by giving
descriptive information about him or retailer collect information from credit card transaction
used by customer. Though I have not found any retailers use these types of collecting
information in my territory.
3.6 Analyzing customer data and Identifying target customers
This is second step of CRM process in retailing. By analyzing customer database and using
the information retailers develop programs for building customer loyalty.

Following are the techniques retailer use to analyze customer-

3.6.1 Data mining

Data mining is the technique that retailer use to understand their customer buying pattern and
helps them for decision making.

I found many retailers use their large data warehouse to put enough information about
customer then use data mining technique to extract the relevant information which is valuable
to serve specific customer.

3.6.2 Market basket analysis

Market basket analysis is a specific type of data analysis that focuses on composition of
basket or products purchased by a customer during a shopping occasion.

I observed that all retailer follow what item customer usually buy in a shopping and they do
so to arrange their merchandize in a way so that customer find their desired products when
they next time come in purchase.

3.6.3 Identifying market segments

Customer data analysis is also essential for market segmenting. I observed that retailer on the
basis of data mining and basket analysis makes a perception about customer purchase. It then
helps retailer to adopt specific policy for satisfying group of customer needs who purchase
similar merchandize

3.6.4 Identifying best Customers

Using information in the customer database retailers can develop a score or numbers
indicating how valuable they are to them. Best customers are determined by-
3.6.4.1 Lifetime value

Lifetime value is the expected contribution from the customer to the retailer‘s profits over his
or her entire relationship with retailer.

Most of the retailer responded to me that they estimate lifetime value by analyzing customer
past purchase, gross margin from these purchases and costs they spend to get this customer.
Costs include their advertising and promotional efforts to acquire customer.

By analyzing LTV retailer believes that a customer who make the purchase pattern in past
will continue same pattern in future.

3.6.4.2 Customer pyramid

A commonly used segmentation of customer is using pyramid approach. Which is shown

below:-

This scheme allows retailers to develop more appropriate strategies for each group of the
segments.

Platinum segments-I asked retailers about their platinum customers. They responded they
regard platinum customer those who make their most purchase and liable for greater profit.
They treat these customers with much care and exclusive service. Platinum customer also
become loyal to customer and become less price sensitive because of good relation. Retailer
often refers their ―key customer as Platinum‖
Gold-They are not as loyal as platinum. Though they make significant purchase from retailer
but they are price sensitive and so they visits many store. I observed this type of customer
who actually can‘t fully rely on a particular retailer rather they seek for suitable offerings
from competitors. Some of them directly blame close retailers if they get fewer prices to
other.

Iron-They have modest LTV to retailer so much attention is not given to this category. I see
retailer provide value if purchase is made and try to motivate for repurchase.

Lead-They are irritating customers who actually do not purchase but go shop to show
merchandize. I saw many customers of this category in my clothing business.

3.6.4.3 RFM (Recency, Frequency, Monetary) Analysis

Recency refers how recent a purchase is made. Frequency means how frequent customer
purchases and monetary refers how much they have bought.

I observed from my research retailer give priority to those customers who make frequent
purchase or purchase in greater volume than those who comes seasonally and less frequently.
Retailers also weight value based on these criteria.
3.7 Developing CRM programs
In this section I would like to describe the strategies or programs retailers use to maintain
CRM in retailing.

3.7.1 Retaining the best customer (customer retention)

Following are the strategies that I found retailer use to reta in their best customer:-

Providing incentives or discounts-most of the retailer I found offer discounted price or

incentives to their loyal customer. During my observation I saw many customers come from
long distance to get incentives on their purchases.

Special customer service-Retailers provide unusual high quality service to retain their best
customers. I saw retailers offer drinks, tea or foods to greet their loyal customers. Other
service includes quick complain solving, keep or replacing returned item, assigning special
salesperson to serve loyal customer etc.

Personalization-By using information collected about customer retailers now can meet the
customer needs uniquely and in customized way. I saw most of retailer keep some items for
only loyal customer. Sometimes retailer keeps order with desired requirements and then
serves those products to satisfy their unique needs. In clothing business this strategy highly
applied.

Informal communications-I seen this policy highly applied by clothing retailer. They often
talk informally with loyal customers and keep relationships alive.

3.7.2 Conve rting good customers into best customers

I previously highlighted about customer pyramid .By this strategy retailers try to convert
good and iron into platinum. Retailer follows two approaches to do this-

Cross selling – selling a complementary product in a specific transaction. I saw some retailers
urges for purchasing a tie when a customer buy a shirt. Some other pursues to sell perfumes
and apparels with the main products.

Add-on selling-By this approach a retailer try to sell additional products with main products.
Many retailer I seen try to pursue customer to sell new products and latest offering or
arrangements with the traditional products.
3.7.3 Dealing with unprofitable customer

All customers are not equally profitable. Some customers always create problem. The return
of sold product, complaining unnecessarily, demands for most costly activities are problem
created by such customers. I asked retailer how the y manage these unprofitable customers,
they replied:-

 We offer less services and efforts to meet the needs of these customers.
 Seek price for costly services and do not provide discounted price or promotions as to
deduct them.
3.8 Implementing CRM process in retailing

The implementation of a customer relationship management (CRM) solution is best treated as

a six-stage process, moving from collecting information about your customers and processing
it to using that information to improve mark eting and the customer experience. I here would
like to describe how retailers (in clothing business) actually go through these steps when they
implement CRM in their business:

 Stage one - Collecting information

As I discussed earlier that every retailers need to have a customer database where they keep
necessary information about customer. I saw retailer mainly use these information to
categorize and segment the customer with different needs and requirements.

 Stage two - Storing information

Only collecting information is not enough to implement CRM. From my study I saw retailer
keep the customer information for longer time in order to communicate in future. Whenever
any address or contact number is changed it requires to update promptly.

 Stage three - Accessing information

Accessing information means using information to make connection. Most of the retailer call
to their customer and provide information about their products even it is not asked by
customer.

 Stage four - Analyzing customer behavior

All customers not seek same service. I observed customer needs and requirements are
different and the reasons for choosing retailer also differ across their perception. Retailers
actually analyze these diverse customers by using data mining or by dealing longer time.
 Stage five - Marketing more effectively

Marketing effectively to inform and pursue customer is another step of retailer to manage
customers‘ relationship, I observed retailer continuously inform their loyal customer base
whenever any new trends comes or if they offer any promotional package.

 Stage six - Enhancing the customer experience

Enhancing customer experience is required to manage customer problems quickly. Most of

experienced retailer I seen having the ability to understand customer through a single look.
These retailers can easily handle when any complain arises.

3.8.1 Critical Success Factors for Implementation of CRM in retailing

Critical success factors are those elements which responsible for successfully implementing
the CRM in retailing. The key CSF for CRM in retailing are:

 Collaborative efforts-A successful CRM requires close coordination from all

departments. A retailer needs to manage all the employees such as sales team, media, and
finance authority coordination.
 Sufficient Resources

In successful retailing a retailer must have clever and experienced personnel, good
physical evidence, and sufficient stock. I saw customer switch to other retailer if the shop
have lack of decoration, insufficient inventory or fewer assortments

 Clearly Defined Objective

There must be a promise to ensure CRM. Retailer often set specific objectives and then
act to achieve these objectives.

 Managing Change

Products of retailers change time to time. Especially in clothing business I saw changing
of design and price are in a dramatic way. So retailers must need to cope with these
changes to service customer better.
3.8.2 Reasons for CRM Implementation Failure in retailing

An understanding of the challenges and critical success factors is paramount to CRM success.
The main reason for CRM failures in retailing includes:

 Customer focus

Many retailers have lace of customer focus. Rather than emphasizing on customer I found
many of retailers just rely on selling products and generating profits.

 Weak Management

In retailing most of shopper have lack of training on CRM, lack of CRM understanding,
lack of communications and changing business trends analysis.

 CRM Project Management

There is misalignment between CRM project and business requirements, with unrealistic
goals, timelines, coupled with a lack of planning and insufficient reporting and control.

 Team Members

There is lack of support, incentives, and lack of technical knowledge among salesperson
to satisfy customer needs.

 Data & Warehouse Requirements

Most of retailers have poor quality data, inconsistent data warehousing system and
lacking of updating data timely.

CRM in retail is failing because the correct capabilities are not being built at the enterprise
level. The requisite changes in retailer culture, behavior and attitude are not being
implemented properly to ensure CRM in retailing.
3.8.3 Suggestions for successful CRM imple mentation in Retailing

 There should be more and more emphasis given by the retailer for satisfying the
customer up to a apex limit and by providing the utility of every penny of money a
customer spend to buy it.
 There should be more use of information technology to collect information timely.
 The retailer should be flexible to bend its rules and procedures in the customers favor.
If any customer intention is assumed for not buying than manage him cordially rather
showing negligence.
 The retailer needs to focus on informal relationships and communications with
customers.
 Retailers need to develop training programs to understand CRM process and serve
customer better.
 Retailer must need to know what the drivers for customer satisfaction and
dissatisfaction are.
 All the employees must need to cooperate with each other for the success of CRM.

3.9 Conclusion

CRM is basically the collection and distribution of ―all‖ data to ―all‖ areas of business. The
data can then help market the company, help up sell to existing customer, understand
customers better so that customers can be given better service and allows them to interact
with the retailer by whatever means they wish. Customer Relationships are achieved by the
retailer working together to give customers what they really want. CRM is a business strategy
to create and sustain long-term, profitable customer relationships. By ensuring effective CRM
process in retail store a retailer not only benefitted by greater sales and profitability but also
can build a strong store image relative to competitor.
3.10 References
1. Michael Levy, and Barton A Weitz. (2003), “Retailing Management (5th Edition)”, New Delhi: Tata
McGraw-Hill.Ch-11, pp.335-360

2. Daffy, C. (1999), "Once a customer, always a customer", New Delhi: HarperCollins.

3. Liljander, V. and Roos I. (2002), "Customer relationship levels: From spurious to true relationships",
Journal of Services Marketing, Vol. 16 No.7, pp. 593-614.

4. http://retail.about.com/od/glossary/g/CRM.htm- Retrieved on 5th February 2011 at 9.35 p. m

5. en.wikipedia.org/wiki/Retail-Retrieved on 4th February 2011 at 10.55 p. m

6. http://www.google.com.bd/search?hl=bn&noj=1&gbv=2&biw=1024&bih=667&tbm=isch&sa=1&q
=CRM+in+retailing&oq=CRM+in+retailing&aq=f&aqi=&aql=&gs_sm=s&gs_upl=38460l41547l0l43208
l7l7l0l0l0l0l876l1542l5-1.1l2l0

7.http://www.google.com.bd/search?q=CRM+in+retailing&hl=bn&noj=1&gbv=2&biw=1024&bih=66
7&source=lnms&ei=u3ExT6LUJ9DwrQeQ69G8BA&sa=X&oi=mode_link&ct=mode&cd=1&ved=0CDA
Q_AUoAA
 About this questionnaire

Dear Sir,
This is Jakaria Ahmed, a student of MBA, Leading University, Sylhet. I am at the end of my
study but to fully complete my MBA I need to submit a project report. My project report is
based on Customer relationship management in retailing (clothing business).For this purpose
I have came in field to collect data and analyze practical situation.
I hereby come to you with a questionnaire. I hope you will be kind enough to cooperate with
me to complete my study.
I assure you that no data will be disclosed to third party without your prior permission. In
addition, this report may help you to effectively use CRM concept in your store.

With best regards

Dewan Jakaria Ahmed
ID-1101010735
MBA, Dept of Business Administration
Leading University
Sylhet
 Questionnaire for CRM in Retailing

1. Have you ever heard about Customer relationship Management concept?

a) Yes
b) No

2. From you viewpoint how you define CRM?

………………………………………………
3. Are your customer‘s needs clearly defined?
a) Yes
b) No
4. Do you have any customer database for collecting data about customer?
a) Yes
b) No

5. What type of information do you keep in your database?

………………………………………………................

6. How you classify of segment your customer?

……………………………………………….

7. How you determine your best customer?

…………………………………………..

8. What are the CRM programs you have?

………………………………………….

9. Do you conduct customer satisfaction surveys?

a) Yes
b) No

10. Do you communicate results of your customer satisfaction surveys regularly throughout
the company?
a) Yes b) No
11. Do you actively seek out customer comments and complaints?
a) Yes
b) No

12. How do you get customer comments and complaints?

a) Face to face interview.
b) Toll free numbers, formal surveys.
c) Others means

13. How do you get information about the customers?

a) Face to face interviews
b) Surveys.
c) Any other means.
14. Do you give concessions to your regular customer?
a) Yes
b) No
11. Do you take feedback from your customers?
a) Yes
b) No
12. Do you customize your product or services according to the customer?
a) Yes
b) No
13. Do you have a concept of ―internal service‖?
a) Yes.
b) No.
14. Do you communicate with your customers frequently?
a) Yes.
b) No.
15. Do you regularly review the business process to eliminate non value- adding activities
and improve customer satisfaction?
a) Yes
b) No.
16. Is the working environment is conducive to the well-being and morale of all employees?
a) Yes
b) No.
17. Is there commitment from top management to support the customer-focused service
concept?
a) Yes
b) No

18. Is there any improvement in average sale per customer?

a) Yes
b) No

19. Is there any improvement in customer response rate to the marketing activities?
a) Yes
b) No

20. Is there any improvement in customer retention and loyalty?

a) Yes

21. What are your strategies to retain loyal customer?

…………………………………………………………………………………

20. How do you implement CRM in your retail outlet?

………………………………………………………………………………

23. Do you consider any factors for success and failure of CRM? If –Yes, then, what are
these?

a) Yes

b) No

Respondents Name and Signature

…………….……………………………………………………