Customer Relationship Management – a

Business context
Increased multi-channel purchasing meant that Staples faced new challenges to their in-store sales revenue
stream. Traditional channel-specific operations worked when consumers investigated, selected, paid for,
and took possession of their purchases in one physical place (the store). Replicating in-store operations
(i.e., aligning the supply chain to a single channel's needs) to the online shopping experience would not be
sustainable. For Staples to successfully address the multi-channel challenge, they required visibility into
the customer’s preferences and behaviors across the entire retail experience from what consumers are
searching for, what they buy, and what their path to purchase was. Staples’ success in the brick-and-
mortar world was mirrored online in 2010, where Staples had the second-largest Internet retail revenue in
the world with $10.2 billion in sales (42 percent of Staples Inc.’s total revenue that year).

To sustain that success, Staples executive leadership was motivated to invest in information systems
capabilities to improve their understanding of customer preferences and behavior. Three initiatives in
particular highlight Staples' efforts to improve the precision of customer preference predictions and
improve the quality of service delivery: launching social media campaigns, connecting with customers
through e-commerce, and advancing their Staples Advantage program with business process outsourcing
offerings. Staples could not be all things to all customers, but by focusing on its strengths it could continue
to advance the vision of serving local businesses. The vision that motivated Staples' founders in the first
place.

Connecting with the customer through social-media powered campaigns

To connect with small business customers Staples partnered with LinkedIn to create the Succeed Small
Business Network. "At Staples, we’re always providing new ways to help our small business customers
succeed,” said Alison Corcoran, Senior Vice President Stores and Online Marketing at Staples. “Together
with LinkedIn, we have the opportunity to develop a vital small business community and build on our
relationships with this important segment.” Staples branding will be visible throughout the group’s page,
including a “Powered by Staples” tag and branded content. LinkedIn has also placed measurement tools on
the group’s pages and links for Staples to gauge performance using user navigation analytics. Both
companies aim to engage existing Staples customers as well as capture the attention of new small business
professionals. As such, Staples and LinkedIn will collaborate on a combination of member-facing e-mails
and e-newsletters, messaging on the Staples’ LinkedIn corporate page, and posts on other social media
platforms.

Staples was growing in understanding the power of social technologies to reach out to current and
potential customers. As part of their learning process, Staples commissioned a survey on social media
targeted to their current small business customers. Respondents indicated that their companies were
spending an average of over five hours per week updating social media content and responding to social
media comments or complaints. The survey results showed that for 85% of small business companies it is
the owner doing the bulk of the social media work.

As part of the overall "Make more happen" program Staples launched a social media tools promotion
campaign called “Staples Push It Forward” Contest. The campaign was first publicized on Staples’ Facebook
page. Three small businesses would be awarded $50,000 each in digital marketing services based upon
their ideas regarding social media promotion and engagement. “Small businesses play a vital role in our
communities,” said Corcoran. She continued, “At Staples, we’ve been helping small business for nearly
three decades and are taking that to the next level by providing the latest digital marketing tools, tips,
expertise and information through our new Staples Business Hub and the Push It Forward Contest on our
Created in support of MISM2301 learning objectives (mad, Spr 2014)
Facebook page. The contest is the result of feedback and insight gathered from our Succeed Small Business
community on LinkedIn.”

However, connecting small business communities globally was appearing more challenging. Staples
generated a modest increase in web-based sales in 2012, but store sales declined globally. For 2012,
Staples, then No. 2 in the Internet Retailer Top 500 Guide, reported total North American sales (including
stores and Staples.com businesses) were $11.83 billion - up 0.8% from $11.74 billion in 2011. Total global
sales, including commercial and international sales, were $24.38 billion, down 1.2% from $24.67 billion in
2011. Exploiting social media platforms in North America had proved fruitful but identifying how to do so
globally was continuing to be a challenge.

Connecting with customers through e-commerce

Through its website Staples hoped to provide a single online destination where consumers and businesses
could procure a wide array of office products and services from Staples – as well as conduct electronic
commerce transactions with each other. But concerns were surfacing regarding Staples' e-commerce
capabilities. Peter Howard, SVP, Business Delivery at Staples stated in 2010, "Our business initiatives are
inherently tied to our technology development platform. And frankly, our systems weren't getting it done.
We were stuck in the mud, so to speak."

Staples.com has three customer-centric guiding principles: easy to find, easy to order and easy to check
out. To Staples "innovation" was about making every online transaction that business customers executed
the easiest, most productive experience they had all day. Systems integration was required so a customer
could go into any Staples store with their online wish list, select more items off the shelf, order additional
items at a kiosk for home delivery, go to the cash register and pay for all their items in one purchase. Then
the next time they sign onto Staples.com targeted products and services are recommended to them based
upon predictive analytics. Staples wanted a platform they could customize to the individual as well as small
business customer segments. So the websites were instrumented with tracking tools to capture the
screen-path through which customers navigated, which pages were the most popular, how much time
users spent on each page, and how many users (general) and customers (particular) returned. And while
Staples needed systems that were well-integrated from front to back end, they also needed solutions that
would perform today and be flexible enough to perform in the future.

Staples has seen some fruit from their IT investment. They increased their online conversion rate by 60
percent without negative performance impact - handling a 30 percent increase in peak transaction volume
(reaching 9,000 orders per hour or 2.6 orders per second). Christine Putur, Vice President of North
America Delivery and Supply Chain IT asserted, “What gets me really excited about this is that we're
contributing to the double-digit growth of this business. It's an e-commerce business, it's online. It needs
technology to drive that revenue." Small business customers seemed to agree that investments in
Staples.com were paying off (see Appendix 1).

However, a focus on e-commerce operations could not come by losing focus on in-store sales and
operations. On the contrary, Staples looked for ways to exploit the customer relationship management
advantages of being a click-and-mortar retailer. In particular executives viewed the role of in-store sales
associates as problem solvers as an important competitive differentiator not available to pure e-tailers.
Empowering in-store sales associates to be problem solvers would mean keeping them aware of store-level
conditions - inventory, sales promotions, staffing levels - while ensuring they continued to have expertise in
their appropriate product category (furniture, computer electronics, printing equipment, etc.).
Connecting with customers through consulting and BPO services
Servicing customers post-purchase was a critical aspect of the customer relationship for Staples. Not only
did Staples want to improve customer retention rates in general, but it wanted to improve its learning
capability regarding customer sentiment and future needs. Staples also wanted to improve their ability to
get deeper into customer organizations, so they began offering operational consulting to small business
customers as part of the Staples Advantage program.

For consulting, Staples established a knowledge repository on their Staples Business Hub website. From
there Small business owners could find advice about issues like "bring your own device" (BYOD) policies,
Breakroom redesign for improved collaboration, and "going green" facilities management programs.
Staples established their online Business Hub to be a knowledge repository for thought leadership on small
business development. From the hub, products and services were aligned with knowledge domains (e.g.,
office productivity, new hire onboarding, supply chain). If customers were interested in obtaining cloud-
based software they could do that also through the Staples App Center. The Staples App Center included a
recommendation tool which allowed potential customers to filter services based upon need, company size,
and industry.

As Staples increased their understanding of customer needs they discovered a demand for business process
outsourcing (BPO) services. BPO offerings from Staples were wide-ranged, but logical extensions of their
retail offerings. Expertise in furnishing and workplace design and cleaning products enabled Staples to offer
Facilities Management BPO services. Expertise in office equipment enabled Staples to offer IT equipment
maintenance (from desktops to data centers) BPO services. Expertise in printing and copying enabled
Staples to offer Printing design and operations BPO services. First, BPO services offerings provided
additional revenue. Second, BPO service offerings enabled Staples to more deeply understand the
challenges customers were facing. Lessons learned from client engagements were captured and shared
across BPO services as well as up to Staples executive leadership. Additionally, since many of the vendor
network partners directly providing BPO services were also Staples customers themselves, doing customer
research (e.g., assessing perceptions of website user-friendliness) could be conducted "in-house" in a
sense.

However, since many of the service providers in Staples' vendor network were small businesses
themselves, at times they would face resource capacity challenges in meeting demand. Keeping track of
BPO vendor performance would be a challenge since the contracting parties where the Staples relationship
was being managed were not the same company representatives that managed the actual customer work
being performed. When a Staples client account manager had a discussion with a small business customer
the account manager needed to know what issues that customer might have had with services levels.
Account managers would interact from time to time with their peers at service providers in the vendor
network, but going forward having real-time information about service levels would require more situation
awareness than just face time would permit.
Sources
1. Corporate Website, Staples.com
2. Staples Survey Reveals Small Businesses Find Growing Value in Social Media, Staples, Inc., corporate
press release, May. 6, 2013.
3. Enright, Allison, "Web sales increase slightly for Staples in 2012 " Internet Retailer, March 6, 2013,
4. Marks, Gene, "Staples' Successful, Uncomplicated Strategy ," Forbes Magazine, 5/14/2012.
5. IBM and Staples customer success story, corporate press release and video, IBM http://www-
01.ibm.com/software/info/television/html/N627483A64458G86.html, (2010) accessed Feb 1, 2014

Appendix 1

Testimony from one small business customer:

Speed, to me is the most important thing. Most business people don’t plan out their
office supply purchases. We order copy paper when the last ream is about to run
out. We order pencils when we can’t find any more around the office. We
(grudgingly) purchase replacement printer cartridges when our printers tell us to do
so (even though many of us don’t believe that the printers are telling us the
truth). When this happens I go to Staples’ website and re-order. The website is like
all websites should be. I log in and immediately see my last orders so I can quickly
click to buy again. I can easily do keyword searches for other things. I’m
encouraged to buy more so I can get free shipping. I get my purchases credited to
an awards program and frequently get coupons that I exchange before completing
the transaction.

If you really want to use technology like Staples then here’s the key: make sure
your website and accounting system are using the same inventory database. Ever
wonder why, before you barely get started, Staples.com asks you for your zip
code? That’s because the site is checking inventory levels at local stores to
coordinate delivery. That's because the most critical aspect of the Staples website,
however, is not the website - it's delivery. I realize that I’m a typical small business
owner which means that I can barely plan what I’ll be doing that afternoon. But if I
can manage to wait just one day, I’ll have my order delivered to my door. A good
retailer uses its website as a convenient tool for its customers.