MINI PROJECT REPORT ON CRM IN RETAIL INDUSTRY

In partial fulfilment of the Requirement for the award of the degree

MASTER OF BUSINESS ADMINISTRATION

Report submitted by ABHAY KUMAR3510910006 AJAY KUMAR GOPE 3510910029 AMARDEEP KUMAR 3510910037 ABDHA KISHOR SINGH 3510910004 AMIT KUMAR 3510910044 AJIT KUMAR SINGH 3510910032 Under the guidance of MR.S.SENTHIL KUMAR FACULTY OF SRM School of Management DEPARTMENT OF BUSINESS ADMINISTRATION SRM UNIVERSITY KATTANGULATHUR, KANCHEEPURAM DISTRICT, CHENNAI BATCH : 2009-2011

BONAFIDE CERTIFICATE
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This is to certify that the Mini project titled of CRM IN RETAIL INDUSTRY. is a bonafide record of work done by ABHAY KUMAR, AJAY KUMAR GOPE, AMARDEEP KUMAR, AJIT KUMAR SINGH, AMIT KUMAR, ABDHA KISHOR SINGH , 2ND year MBA, SRM UNIVERSITY, Chennai, in partial fulfillment of the requirement for the award of the degree MASTER OF BUSINESS ADMINISTRATION, during the academic year 2009-2011.

MR.S.SENTHIL KUMAR
FACULTY OF

SRM School of Management

ACKNOWLEDGEMENT

I express my deposit and sincere thanks to our respected Dean Dr. Jayashree Suresh who has given me an opportunity to do this project. Who guide for their valuable guidance and constant encouragement in successful completion of this project. I am thankful to the management of SRM college for having given me an opportunity for conducting a this project in their esteemed organisation. I would like to thank our friends and all others for their whole hearted cooperation in making this Mini project a success.

INTRODUCTION OF CRM Customer relationship management (CRM) is a broadly recognized, widely-

implemented strategy for managing a companys interactions with customers, clients and sales prospects. It involves using technology to organize, automate, and synchronize business processesprincipally sales activities, but also those 3

for marketing, customer service, and technical support. The overall goals are to find, attract, and win new clients, nurture and retain those the company already has, entice former clients back into the fold, and reduce the costs of marketing and client service. Customer relationship management describes a company-wide business strategy including customer-interface departments as well as other departments.

Changes in customer expectations can be identified throughout the world. Customer relationship management (CRM) strategies have become increasingly important worldwide due to these changes in expectations from customers as well as changes in the nature of markets. Changes have been noted across the world, but opportunities present themselves in South Africa and other developing countries for CRM strategies. Customer Relationship Management (CRM) is a managerial philosophy that seeks to build long term relationships with customers. CRM can be defined as the development and maintenance of mutually beneficial long-term relationships with strategically significant customers . Under certain circumstances it may result in the termination of relationships. It can also be noted that the relationship is developed with strategically significant customers, and hence it is necessary for the organisation to determine the nature of the significance. Traditionally this would be done by determining the value of the customer to the organisation, but other criteria that can be used include whether a customer serves as a benchmark for other customers or whether the customer inspires change in the supplier .

The implementation of CRM is regarded as desirable by organisations due to the benefits that accrue from these strategies among their customers, such as greater loyalty and resulting profits. The focus of a CRM strategy is the acquisition, retention and overall customer profitability of the specific group of customers. Acquisition of customers: this refers to the need of organisation to find new customers for their products. This means they are required to develop strategies to 4

attract potential customers to purchase the product. The cost of attracting a new customer is estimated to be five times the cost of keeping a current customer happy. Retention of customers: organisations also need to focus on existing customers in order to ensure that they continue purchasing and continue supporting the product. Organisations can increase their profitability by between 20% and 125% if they boost their customer retention rate by 5 percent. Profitability: Customer profitability reflects the financial performance of

customers with respect to all the costs associated with a transaction. Profitability in the case of CRM is determined in the light of the lifetime value of the customer to the organisation, taking account the income and expenses associated with each customer and their respective transactions over time .

PHASES

The three phases in which CRM support the relationship between a business and its customers are to:

Acquire: CRM can help a business acquire new customers through contact Enhance: web-enabled CRM combined with customer service tools offers

management, selling, and fulfillment.

customers service from a team of sales and service specialists, which offers customers the convenience of one-stop shopping.

Retain: CRM software and databases enable a business to identify and reward

its loyal customers and further develop its targeted marketing and relationship marketing initiatives. CHALLANGE Tools and workflows can be complex, especially for large businesses. Previously these tools were generally limited to contact management: monitoring and recording interactions and communications. Software solutions then expanded to embrace deal tracking, territories, opportunities, and at the sales pipeline itself. Next came the advent of tools for other client-interface business functions, as described below. These tools have been, and still are, offered as on-premises software that companies purchase and run on their own IT infrastructure.

Often, implementations are fragmentedisolated initiatives by individual departments to address their own needs. Systems that start disunited usually stay that way: siloed thinking and decision processes frequently lead to separate and incompatible systems, and dysfunctional processes.

Business reputation has become a growing challenge. The outcome of internal fragmentation that is observed and commented upon by customers is now visible to the rest of the world in the era of the social customer, where in the past, only employees or partners were requires a shift in aware of it. Addressing the mindset within an fragmentation philosophy and

organization so that everyone considers the impact to the customer of policy, decisions and actions.

IMPLEMENTING A CRM STRATEGY

The success of any strategy is determined by the success with which it is implemented. This is also true in the case of CRM strategies. Implementing CRM require that the organisation and the associated business processes be in place in order to facilitate its success. The risk in implementing any CRM strategy is that the organisation is not ready to do so and relying on technology to implement the strategy. The role of customer service in CRM strategy In order to implement a CRM strategy, a key dimension is the question of customer service and the way in which it is perceived by the recipient of the service. Customer service can be defined as a task, other than pro-active selling, that involves interactions with the customers in person, by telecommunication, or by mail. It is designed, performed and communicated with two goals in mind: operational efficiency and customer satisfaction. The quality of customer service is determined and evaluated by the customer, and this affects the desirability of a relationship with the organisation. Customer service creates the moments of truth with the customer, and these service encounters need to be managed by the organisation. Service encounters and CRM are thus associated.

The steps in the implementation of CRM strategy Successful implementation requires specific actions on the part of the organisation. The implementation of a CRM strategy as proposed by Peppers, Rogers & Dorf (1999) comprises four steps, namely the identification of customers, the differentiation of service, interaction with customers and the differentiation among customers. Step 1: The identification of customers The identification of customers enables the organisations to select those customers that they regard as being strategically significant and who they believe can contribute to the success of the organisation. These customers have unique needs 7

and due to their value to the organisation, will have products developed to meet these needs. It must be possible to identify these customers and so obtain as much detail as possible. This involves collecting as much data as possible in order to obtain as clear a picture as possible of the customer and their profile. This may require the development of a database or the continued maintenance of a database in order to ensure that the data stays as recent as possible. Having this information enables the organisation to determine those customers that have been with the organisation for a long period and those that have recently started using the products and services of the organisation. The hypothesis regarding this aspect is formulated as follows: H1: Identifying new and existing clients increases the level of customer service. Step 2: The differentiation of service The differentiation of service implies that different customers receive a different level of service and a different product from the organisation, depending on the value to the organisation and their specific needs.This requires the organisation to identify the top (or most significant) customers and adapt service accordingly. Identification of these top customers takes place using sales figures or by calculating the CLV associated with each customer. As the organisation is aware of the value of their customers, service levels can be adjusted accordingly. The hypothesis regarding this aspect is formulated as follows: H2: Differentiating between the services offered to new and existing clients increases the level of customer service. Step 3: Interaction with customers This step refers to the importance of interacting with the customer in relationship building efforts through a variety of communication tools and technologies. This is necessary as the relationship can only develop and be sustained if there is communication with the customers regarding their needs, perceptions and desires. This involves developing methods of communication proactively with customers regarding the organisations products and attempting to initiate dialogue with customers. Use can be made of technology, but this is not essential (Brunjes & Roderick, 2002). The customers with whom communication takes place are not necessarily all the customers, but only 8

those that the organisation regards as being strategically significant. This interaction with the organisation increases the expectations of the customers regarding the service received as well as the quality of the relationship. The hypothesis regarding this aspect is formulated as follows: H3: The level of customer service is increased if there is an active interaction with potential and existing clients. Step 4: Customisation of products, services and communication Customisation is carried out by the organisation in order to ensure that customer needs are met. It requires that the organisation adapts its product, service or communication in such as way have something unique for each customer. Communication can be customised to address the specific needs and profile the customer, and organisation also makes use of personalisation as part of this process. Products can be customised as to the specific desires that the customer has of the organisation. In the case of the financial services, it refers to the product package that is offered to the customer. The purpose of customisation is to increase customer satisfaction, and the loyalty that is exhibited by customers. The hypothesis regarding this aspect is formulated as follows: H4: The level of customer service is increased if customised service is offered according to each individual clients needs.

CRM PRACTICES IN DIFFERENT RETAIL COMPANIES

In todays retail industry, understanding customer needs and delivering a positive customer experience are critical to building long-term profitable customer relationships. For forward-thinking retailers, the fundamental challenge is to ensure customer loyalty and satisfaction by providing a consistent customer experience across multiple channels. It offers integrated database marketing capabilities that unify enterprisewide customer data and bring customer intelligence to the planning, execution, and monitoring of outbound marketing campaigns. Organised retailers are employing IT to know their customers better.Retail is all about knowing your customers thoroughly in order to serve them better. To accomplish this Indias oldest textile manufacturers and retailers, Raymond India decided to implement CRM (customer relationship management) across most of its retail outlets. The CRM implementation is named Premium Circle. CRM helped the company understand the colour and design preferred by a particular age group or why a particular group or individual did not buy or did buy a particular product. Customers using it are known as premium users and are given a premium card. The aim of CRM implementation was to ensure three principlesavailability, reliability and scalability. 10

Pantaloon Retail
Pantaloon Retail is the flagship enterprise of the Future Group. Pantaloon Retail (India) Limited has spread across various businesses and cities in India. Pantaloon owns multiple retail formats and is able to cater to a large section of the society. The company has over 140 stores across 32 cities in India and 14000 employees. The headquarters of the company are situated at Mumbai. The organization made an incursion into the modern retail (fashion) in 1997. Big Bazaar, a hypermarket chain, was introduced in the year 2001, with an Indian touch of convenience and hygiene. Food Bazaar, food and grocery chain, and Central Mall located at various Metros are other important parts of the group.

Others include Collection (home improvement products), E-zone (consumer electronics), Depot (books, music, stationery and gifts), Blue Sky (fashion accessories) and Shoe Factory (footwear). The company has also launched a retailing venture known as futurebazaar.com. The vision of Future group is to "Deliver Everything, Everywhere, Every time to Every Indian Consumer in the most profitable manner."

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National Retail Federation gave Pantaloon the 'International Retailer of the Year' Award.

LIFESTYLE
Lifestyle is an international fashion store of the Landmark Group, a Dubai-based company. Lifestyle created a revolution in the Indian Retail Industry by bringing a truly international shopping experience. It was launched in Chennai, and now it is one of the largest professional retailers spread across 3,25,000 sq. ft. in various cities such as Chennai, Gurgaon, Mumbai, Hyderabad and Banglore. It is a heaven for shoppers with a vibrant and spicy lifestyle. It provides a wide choice of products at affordable prices with a convenient world-class environment and a friendly layout. Being one of the best shopping destinations, it has won the ''Most Respected Company in the Indian Retail Sector' and the 'Most Admired Large Format Retail Company' awards in India.

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SHOPPERS' STOP K. Raheja group of companies founded Shoppers' Stop on October 27, 1991. The organization had already made its presence felt in the hospitality and real estate sector, and now it has created a landmark in the Retail sector with Shoppers' Stop. Shoppers' Stop is famous for the expertise and acumen relating to the current practices of the industry. It provides quality services, products and the right kind of shopping environment. It has developed itself as a household name and has set high standards for itself with the mission statement: " Nothing but the best". In 2005, the company had 25 stores with a turnover of Rs. 1000 crores and 7 lakh sq. feet retail space in the year 2005. The average age of the employees in the organization is 25 years.

Highlights of Q4FY10
Gross Retail Turnover at Rs. 422.9 crs; jump of 20 % Net profit at Rs. 16.4 crs; increase of 197 % EBITDA at Rs. 27.1 crs, up, by 100% Like-to-like growth at 16%; compared to 3% degrowth last year. Shoppers Stop launched its first store in Punjab Amritsar and third store in Bengaluru; taking the total to 30 stores across India Launched 3 new Crossword stores The Board of Directors has accorded their In Principle approval subject to requisite approvals, for acquisition of balance 32% of share capital of Hypercity Retail (India) Ltd., (Hypercity) from its promoters, pursuant to an Option Agreement, executed with them. The Company already holds 19% stake of Hypercity. The option for this balance acquisition is available with the 13

Company till June 30, 2010. Highlights of this year: Gross Retail Turnover at Rs. 1570.9 crs up by 12 % Net profit at Rs. 50.2 crs; increase of 179 % Total stores added during the year: 4 Shoppers Stop stores, 4 Crossword outlets, 2 MAC stores, 2 Estee Lauder stores and 1 Clinique store 15% dividend recommended for the year, subject to approval of shareholders

RPG ENTERPRISES
The history of RPG Enterprises goes back to the 19th century. In 1979 Mr. RP Goenka took the initiative to set up RPG Enterprises. Presently it has a turnover of US$ 1.65 billion (Rs. 7472 crore) and assets worth US$ 1.8 billion. Among the fastest growing groups in India, it is operating successfully through more than 20 companies in 7 business sectors, namely Retail, IT & Communications, Power, Transmission, Entertainment, Life sciences and Tyres.

The organization believes in responding to a business opportunity, making optimum utilization of resources, and inspiring people to foster teamwork. Quality is another important parameter for the enterprise to improve continuously and satisfy customers in the best possible manner.

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Performance, excellence and entrepreneurship are ingrained in the organization as core values. It is a place where the employees are aware of the Corporate Social Responsibility, involving in various social activities, sports and arts. The organization operates through various retail formats such as supermarkets, hypermarkets, music stores and health and beauty products outlet. Its largest chain of Spencers offers a complete array of products and durables. It is operating through 80 stores spread in 20 cities, and is still growing rapidly. Every month nearly 2.6 million people walk in its stores. The stores are located in Bangalore, Mumbai, Delhi, Chennai, Trivandrum, Hyderabad, Faridabad, Vizag, Aurangabad, Pune, Ghaziabad, Cochin, and many more. The music store of RPG Enterprises - MusicWorld delivers its products through 170 outlets spread in 21 cities. The enterprise has also set up a training institute for Front Line Staff and Staff Managers known as RPGInstituteofRetailManagement(RIRM).

Lifestyle is an international fashion store of the Landmark Group, a Dubai-based company. Lifestyle created a revolution in the Indian Retail Industry by bringing a truly international shopping experience. It was launched in Chennai, and now it is one of the largest professional retailers spread across 3,25,000 sq. ft. in various cities such as Chennai, Gurgaon, Mumbai, Hyderabad and Banglore. It is a heaven for shoppers with a vibrant and spicy lifestyle. It provides a wide choice of products at affordable prices with a convenient world-class environment and a friendly layout. Being one of the best shopping destinations, it has won the ''Most Respected Company in the Indian Retail Sector' and the 'Most Admired Large Format Retail Company' awards in India.

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