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 Limitations

P.N-01-03

1.0 1.1 1.2 1.3 1.4

Scope of the study Significance of the study Objective of the study Research
Methodology Limitations of the Report

01 01 01 02 03

Chapter – 02 (Theoretical Framework)

04-12

2.0 2.1 2.2 2.3 2.4 2.5 2.6 2.7 2.8

Introduction History of CRM Why Customer Relationship Management? Ways to keep

customer for life Things need to done for CRM Key CRM principles CRM programs
Architecture of CRM Tools needed for CRM

04 05 06 06 07 08 09 10-11 12

Chapter – 03 (CRM in Retailing)

13-26

3.0 3.1 3.2

What is retailing? Necessity of CRM in retailing How retailers benefitted by CRM

13 13 14
3.3 3.4 3.5

Satisfaction drivers for building relationships in retailing Process of CRM in

retailing Collecting Customer data

15 16-26 16-17 16-17 17 18-20 18 18 18 18-20 19 19 20 21-22 21 21-22 22 23-26 24 25

26 26 27

3.5.1 Customer database 3.5.2 Approaches for collecting information

3.6

Analyzing customer data and identify target customer

3.6.1 Data mining 3.6.2 Market basket analysis 3.6.3 Identifying market segment
3.6.4 Identifying best customers 3.6.4.1 Lifetime value 3.6.4.2 Customer pyramid
3.6.4.3 RFM (Recency, Frequency, Monetary)Analysis 3.7 Developing CRM programs

3.7.1 Retaining the best customers 3.7.2 Converting good customers into best
customers 3.7.3 Dealing with unprofitable customers 3.8 Implementing CRM process in
retailing

3.8.1 Critical success factor implementation of CRM in retailing 3.8.2 Reasons for
CRM implementation failure in retailing 3.8.3 Suggestion for successful
implementation of CRM in
retailing

3.9 3.10

Conclusion References
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 ongoing 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 massmarket 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

multichannel 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
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. are the tastes and
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 customer3.6.1 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
thisCross 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=38460l41547l0l4
3208 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

…………….……………………………………………………