How to Choose the Best Retail CRM Software
Summary
- Retailers have unique requirements that are only satisfied with Customer Relationship Management software built for their industry.
- Retail CRM software is designed to accommodate industry specific requirements such as consumer insights, consumer segmentation, a 360 degree consumer view, consumer marketing, consumer selling, Customer Experience (CX) management, loyalty programs, omni-channel engagement and consumer-based customer service.
- The top 4 retail CRM software systems, as measured by market share and market growth, are Salesforce, Oracle CX, Microsoft Dynamics and SAP.
Retail CRM Software is Different
Customer Relationship Management software for retailers is different when compared to other industries. It's not about account, contact and opportunity management. It's about industry imperatives such as the consumer experience; industry essentials such as omni-channel engagement and loyalty programs; industry processes such as sophisticated pricing, discounting and promotion; and technology requirements such as real-time integration with e-commerce, point of sale (POS), supply chain management (SCM) and enterprise resource planning (ERP) systems.
The best applications for this industry recognize that the sales process isn't about a considered purchase, it's about Clienteling or satisfying a moment of truth in the consumer journey. Similarly, marketing isn't about nurture campaigns supporting long sales cycles, it's about precision campaigns based on highly specific consumer segments delivered in social, mobile and customer preferred channels. Be clear, CRM for retail is different.
When searching for the best retail CRM software many novices evaluate technology features. That's a mistake as software features and functions may or may not deliver business results. A better approach is to lead with the most strategic business objectives and then identify the application capabilities that directly accelerate those goals.
The four most strategic objectives are to acquire more consumers, grow consumer share, increase consumer retention and lower marketing, sales and customer services costs.
Technology to Grow Consumer Acquisitions
The best applications support this objective with several important capabilities.
- Customer Insights. In order to achieve effective marketing, sales and customer service, companies must really know their consumers and what they want. Inaccurate assumptions or not fully knowing what consumers want will degrade your marketing and sales effectiveness and set back business results by quarters or years. Consumers are not homogenous so they must be identified by persona and segment. Application capabilities to support this requirement include Voice of the Customer (VoC), crowdsourcing, tracking of digital footprints, insights dashboards and a 360 degree consumer view.
- 360 degree consumer view. Every software vendor claims to deliver a 360 degree customer view. But most don't. At least not for retailers. What most deliver is a customer view with demographics and purchase transaction history. It's a start, but consumers are far better defined by their behaviors than their demographics.
Demographics are explicit data while behaviors are implicit data. Explicit data such as age and income only indicate how interested the business is in the consumer. Implicit data such as online behaviors, digital footprints, sentiment analysis, emotions and a social profile show how interested the consumer is in the business. To achieve a 360 degree consumer view in the this industry you need 5 types of consumer data - demographic, transactional, behavioral, environmental and social.
- Consumer segmentation. Companies need to be able to target offers based on consumer audiences, preferences and offer conversion history. The best retail CRM software creates dynamic segments based on explicit and implicit traits. Explicit data such as demographics is a start, but implicit data such as real-time digital and behavioral data dramatically enhance segmentation with attributes and dimensions that more accurately predict intent and demand. The bottom line is that the more precise the segmentation, the higher the conversions.
- Consumer marketing. Marketing effectiveness is driven by combining precise customer profiles and segments with relevant and personalized offers delivered in the right channel at the right time. The best applications use personas and consumer journey mapping to orchestrate these variables.
They support flexible, non-linear journeys. They measure each milestone or moment of truth in the journey to assess its effectiveness in getting the consumer to the next step, and to a purchase. They can identify bottlenecks, loopholes and fall-off points and even compare different responses to identify the optimal journey map.
Other marketing capabilities include list management, multichannel campaign execution, conversion rate optimization and marketing resource management. The best retail CRM software goes even further with functionality to support mobile, proximity, social, contextual and SoLoMo campaigns.
- Consumer sales. Sales are delivered through e-commerce, POS and Clienteling. Technology supports these sales methods with guided selling automation, relevant promotions, intelligent up-sell, cross-sell and bundles, and Next Best Offer recommendations.
The more advanced systems also include price optimization, strategic pricing, discount policies and capture management – all delivered over multiple channels.
As an example, fewer than one in ten retailers leverage clienteling tools, which results in a lost opportunity for building personal relationships between consumers and associates. In fact, consumer research consistently shows that personal attention makes the difference between browsing and buying.
Clienteling delivers personalized customer service using mobile devices such as tablets or portable POS terminals. This engagement technique empowers sales associates to provide deeper product content, real-time promotions, inventory availability, cross-sell and up-sell suggestions. It can go further and deliver product recommendations based on consumer attributes and prior purchases, mobile check-out, portable payment processing, shipping information and a 360 degree view. In fact, that 306 view can include style and brand preferences, prior purchases, active warranties, loyalty program information, key dates such as anniversaries and birthdays, and more. This is also an effective method to reduce showrooming. Most importantly, it aids the delivery of an exceptional in-store customer experience.
Technology to Increase Consumer Share
Returning consumers spend on average 67 percent more than first-time customers (source: Bain and company). In several retail sectors up to 15 percent of a brands most loyal customers account for 55-70 percent of the company's total revenues (source: The Center for Retail Management at Northwestern University).
There are many technology capabilities to increase return visits, repeat purchases, customer share and customer lifetime value (CLV).
- Accelerated product commoditization coupled with more informed, connected and empowered consumers requires companies to step up their game. Customer Experience (CX) management has become the go-to strategy to create what may be the most strategic and sustainable competitive differentiation. Applications aid this strategy by applying data to deliver differentiated customer experiences.
Technology facilitates end-to-end consumer engagement journeys over physical, digital, social and mobile channels. It applies consumer preferences, personas and purchase histories in ways that deliver relevant, personalized and contextual consumer experiences.
It also measures each consumers customer experience using RFM analysis or methods such as NPS (Net Promote Score) or CSAT (Customer Satisfaction) scores.
- Customer loyalty. Loyal customers spend 67 percent more than new customers (Source: Inc). Loyalty systems provide the enabling technology to help advance consumers from browsers to buyers to repeat customers to advocates.
Customer relationship management systems support the most strategic goals of using loyalty programs to grow customer intelligence, improve customer lifetime value, increase margins with the most profitable customers, and shift customer loyalty from products to the brand.
The best systems support loyalty or rewards programs that include progressive loyalty tiers, point account management, flexible rule modeling, benefits handling, voucher handling, performance metrics (such as reward rates and break rates), and direct integration with POS and digital commerce platforms. They also integrate with the marketing application to deliver personal and relevant promotions that are more likely to convert.
- Omni-channel engagement. In a research report titled, Satisfying the Omni-channel Consumers Whenever and Wherever They Shop, IDC Retail Insights reported that while multi-channel shoppers spend, on average, 15% to 30% more than consumers who use only one channel, omni-channel shoppers will spend 15% to 30% more than multi-channel consumers. Even better, they also exhibit stronger brand loyalty, often swaying others to patronize the brand.
That's why meeting consumers on the channels they search, communicate, evaluate and buy, and accommodating their communication and purchase preferences is an undeniable mandate. And a mandate enabled with technology.
Consumers expect that conversations started on one channel can be continued on others, with all communication and context preserved across channels. That's why the best retail CRM software maintains conversation fidelity as conversations traverse multiple channels. They also offer social listening tools to identify consumer conversations about the brand or its products, and social engagement tools to communicate on social networks.
- Customer Relationship Management. All merchandise becomes commoditized over time thereby making product-centric companies vulnerable. Fortunately, consumer relationships don't deteriorate over time giving customer-centric businesses a more sustainable competitive advantage.
The "R" in CRM is where the most strategic opportunity occurs, or far too often fails to occur.
Consumers want to engage with their preferred brands pursuant to their terms and using their personal technologies. Brands that apply Customer Relationship Management strategies and technologies to engage and nurture these consumers will find that these relationships trump every other competitive differentiation factor for certain classes of consumers, such as loyalty members, repeat customers and high value customers.
Technology to Increase Consumer Retention
Consumer churn is like a disease. Left unattended it only gets worse.
Fortunately, the best applications provide tools to decrease churn. These tools include customer self-service (portals, knowledgebases, social service, bots, virtual agents, communities) and business intelligence (BI) that quickly detects causes of attrition.
BI capabilities include data quality tools, data enrichment tools, data transformation pipelines, dashboards, artificial intelligence (AI) and machine learning (ML).
Some systems calculate consumer health scores and use predictive analytics to detect consumers at risk of churn. They further use predictive analytics to forecast buying patterns, offer responses, sales conversions and up-sell lift.
It's the BI that can account for seasonal trends, halo effects, cross category relationships. The BI can figure out how to get the right product at the right price on the right channel and the right time.
Peter Drucker may have said it best when he advised that "Knowledge has become the key economic resource and the dominant–and perhaps even the only–source of competitive advantage."
Technology to Lower Operational Costs
Customer Relationship Management systems built for retailers not only provide the capabilities to grow consumer acquisitions, share and retention, but to do it efficiently to lower business process cycles and cost.
These applications provide the data management, process automation and information reporting to scale customer facing business processes. Depending on the company, certain processes such as order-to-cash, trade promotion management, demand planning and retail merchandising may be performed within the application or as shared process with other legacy systems.
Finally ...
I'm frequently asked what's the best CRM for retailers? The short answer, based on market share and my experience in implementing these systems in this industry for more than three decades, is Salesforce, Oracle CX, Microsoft Dynamics 365 and SAP. The longer answer and a much deeper analysis is available at the top 4 CRM for retail systems.