DEVELOPING CRM

DAN ALAIMO

Now that supermarket operators are inundated with Customer Relationship Management data, what should be done with it?

This appears to be a simple question, yet many retailers are wondering this aloud these days, especially with the technological advances making CRM even more powerful.

"The thing to remember with CRM is that the easy part is getting the information. The hard part is analyzing it," said Marv Imus, vice president and owner of Paw Paw Shopping Center, a single independent operator in Paw Paw, Mich.

"There has been a broad spectrum of success and failures in this regard," Imus added.

"Our effectiveness comes in using the data in everything we do," said Lisa Piron, director of management information systems for Green Hills Farms, an independent operator in Syracuse, N.Y.

"Everything we do with CRM is all based on the customer metrics," Piron added.

Experts claim CRM programs were originally designed for businesses with much different ways of reaching their customers, not supermarkets.

"Almost entirely, CRM concepts were developed based on companies where a database is central to their business processes," said Glen Hausfater, managing partner, Partners in Loyalty Marketing, Chicago.

For example, customer databases are central for businesses like telephone companies, banks or other financial service companies.

For supermarkets, the primary customer interface is not a database, but the store itself, noted Ken Wyker, president of the consultancy, Wyker Marketing, Charlotte, N.C.

"If you don't have a business model that is based on a store presence, then your reliance on CRM concepts has to be much stronger," he said.

Piron agreed and said staying in touch with the data that comes through the store is one way of ensuring a successful CRM program.

Piron noted one Thanksgiving promotion that awarded a free turkey to customers who spent more than $500 was improved when seniors were added to the mix.

She said that a second tier of the promotion was added awarding a turkey breast to shoppers 55 or over who spent more than $300.

In this way the program was boosted as to not exclude a particular segment of loyal customers.

Wyker said supermarkets tend to use CRM more for promotional purposes or to get feedback from consumers.

"How do I motivate the customer to buy or how do I understand better what the customer wants? That is where grocery retailers tend to focus," he said.

In the future, though, supermarkets will use Internet-based technologies to enable more personalized communication that will bring them targeted offers, couponing and pricing.

"The industry has capabilities right now from a pricing and promotional standpoint that are not fully utilized. But over time, customers will get accustomed to it, the infrastructure will be able to handle it, and individual customer pricing will become more prevalent," Wyker said.

But the real benefits will come in using CRM to tie loyalty program data to category management, a project he is working on now, he said.

"The key is that next step for category management is to integrate the tools of loyalty marketing and an understanding of the dynamics underlying consumer behavior. It is evaluating category performance from a consumer dynamics perspective," he said.

"The challenge for CRM to apply it in the retail world is, you have got to begin to show that somehow we can take our existing business processes and do them better," Hausfater said.

"You have to take a corporate view of how your customer franchise is segmented and then begin to look at those segments against some kind of key metrics. There is progress going on there. It's probably not as much as we would like. There is also progress in using the customer database to improve basic aspects of category management," he said.