Case 2- [Customer Perspective] Filene's Basement Case Analysis

Prepared by:

Andres, Joshua Joe M.

Cortez, John Paul
De Lima, Angela Luz
Guevara, Jochebed
Mamanao, Ma. Glyza
Mejia, Cailin
Torres, Zyra

ACCO 30183
Performance Management Systems

June 2021
Introduction:

This case study explores customer relationship management, which is a strategy for

managing a company's interactions with existing and prospective customers. The CRM strategy

aims to evaluate data about a company's customers' past to strengthen business connections with

customers, with a particular focus on customer retention, to generate market growth.

This case allows us to discuss whether terminating clients is a good idea, as well as the

mechanisms through which client relationships become unprofitable. The diversity and dynamics

of consumer-brand connections, as well as how they are developed, fostered, and transformed

over time via a company's CRM systems, are explored in this example. Customer lifetime value

analysis (CLV) may be used to evaluate a customer relationship's profitability, allocate

customers to tiers in the customer profitability pyramid, and discuss ideas for increasing their

profitability over time. The example allows us to debate whether dismissing clients is a smart

idea, as well as the dynamics that lead to unproductive customer relationships.

Filene's Basement's main problem was indeed the changing administration. As a result of

the change in management, as well as the developing strategy and pressure to perform, a once-

Platinum customer has now become a Lead customer. The worth of the client was traded in for a

greater emphasis on just generating a profit because of managerial changes.

Overview:

Norma had been a loyal customer of the firm for the previous 19 years, but she was fired

due to excessive returns and many documented complaints. Norma had been a long-time client

who had become accustomed to receiving treatment from the staff. Norma's relationship with

Filene's Basement deteriorated because of her "excessive returns" and "often documented

complaints," and she was no longer regarded a privileged customer. If she went into any of

Filene's basement retail businesses, she was threatened with legal action.

Edward A. Filene saw the unsold products and devised a better inventory management

system. The concept was that if a product lasted on the sales floor for 12 days, it would be

discounted by 25%, then 50%, then 75%, and finally 75%. Those initially thought the Filene

strategy was strange, and after that they wait for the goods to go under the 75 percent discount

zone, so the Filene stated that people who wanted to acquire appealing things should arrive early.

They sort their customers based on the traffic light signal colors, green for platinum and gold

customers, yellow for silver and bronze customers and red for prospective customer. Norma was

a regular customer in the 1970s, and she used to come to the basement once a week. She was

referred to as one of "The Regulars." She became acquainted with all the store's staff, including

the shop manager, because of her frequent visits. Employees at Filene's Basement used to treat

her like royalty, offering her large discounts. Their relationship was such that the store manager

would inform her of the sale ahead of time, and she would make herself available on that specific

day. She became so comfortable with the employees that she would go out of her way to see

them outside of the business, treating them as friends. She used to make various ideas to the store

manager for store improvements. And she used to bring more and more customers to thank the

store management and employees for their kindness. During this period, the business' objective
or attitude was customer-centric, with consumers viewed as monarchs. Giving customers what

they want was thought to be the key to successful commerce. She did not receive any more

discounts when the department store was owned by several firms. With the shifting trend and the

firm's new ownership, the shop is now looking at the costs that the company has experienced

because of her. The shop manager was becoming aware of the fees incurred by the company

because of her. Norma was demoted from platinum to lead rank at this point. Norma was no

longer wanted by the company since the trend had switched from customer assessment to

customer termination. As a result, the store's attitude toward Norma shifted, and she was finally

sacked. Norma was humiliated by the fact that she was no longer regarded as a VIP customer,

and she told the tale to the media.