The retail or retail trade is inserted in an environment of extreme competition which means that companies have little space to obtain good returns. Many times the keys to the success of the retail business according to Ostale, Enrique and Bianchi Constanza (2004) are in growing very quickly both in the local market and abroad with the idea of achieving large sales volumes and obtaining high discounts. This situation has produced a massification of customers and a very sharp drop in buyer loyalty due to new technological opportunities, increased competitorsand changes in consumer tastes and preferences. According to Geibe Kolbe and Brenner (2005), they mention that there is a decrease in customers and a very sharp drop in buyer loyalty due to new technological opportunities, increased competitors and changing consumer behavior.
Given this situation, CRM was born, which is a powerful tool that will improve the relationship with the client, increase loyalty, retain clients and obtain higher returns for the company.
INTRODUCTION
This paper aims to study the most important elements of a CRM implementation. We will cover topics such as what CRM is, how it is defined, what are the key factors of success in its implementation, loyalty and loyalty programs, and how these practices translate into an increase in the value of the company. As well as a practical case of Audi in Mexico.
METHODOLOGY
Existing material was consulted in the digital library of the Technological Institute and Superior Studies of Monterrey with the aim of analyzing the key factors in the implementation of a CRM program in the Retail industry. In addition, some studies were carried out at the Global Management Center of the Business School of Valparaíso at the Adolfo Ibáñez University.
CHAPTER 1 What is CRM?
The term CRM comes from the acronym in English Customer Relationship Management, Customer Service Relationship Management. According to Tere Lucio (2005) CRM is an approach that allows the organization to focus its attention on the customer in order to interact more effectively with her, identify her importance, retain her in the organization and prevent her from leaving the competition. On the other hand, CRM according to Ariel Valero (2006) is a business philosophy in which it is proposed to understand and anticipate the requirements of consumers, both existing and potential, so it can be understood as a business strategy focused on the client and on your needs.
Having the knowledge of the needs and desires of the clients represents a competitive advantage in the market, in such a way that the companies can maintain a high index in the loyalty and retention of clients as well as the facility to attract new consumers. This can easily be translated into sales. According to studies by Kankanhalli, Tan and Kwok-Kee, (2005), the strategic management of organizational knowledge is a key factor in helping the organization maintain a competitive advantage in volatile environments. Technology, specifically Information Technology (IT), allows improving CRM processes. How Boyle (2004) mentions, properly managed, raw customer data,They can be powered by CRM software and become cohesive intelligence that can be analyzed to forecast trends and returns, find growth opportunities, make key decisions for management, justify expenses of marketing resources, among others.
CHAPTER 2 Implementation of CRM
Lopez and Shaw (2002) indicate that an effective implementation of CRM allows to improve relations with customers, getting to know them better and allowing to decrease costs and increase loyalty of existing ones, which, in both cases, means higher sales and more profitability. for business. Bradshaw and Brash (2001) argue that CRM applications must not only be functionally integrated in customer service but also in the organization's own functions such as manufacturing and advertising.
Brown (2001) proposes five elements required for a successful CRM implementation:
- Strategy. There are 6 types of strategies that affect a CRM program: channel, segmentation, price, marketing, branding and advertising. The first three are the ones with the greatest impact. The channel strategy determines the means that will be used to deliver the offer to the customer. The segmentation strategy will determine the structuring of the clients and, consequently, that of the marketing organization. Pricing strategy is the most important differentiation in a generic product market and will determine more than half of the value of the offer.It refers to the classification of customers according to their needs for the determination of marketing activities to ensure the effective use of segmentation. Companies must develop the correct set of formulas for modeling customer behavior. Technology. CRM functionality depends on data and information sharing. That is why creating a single, integrated, operations-oriented logical database is the fundamental technical consideration. Processes. The processes must incorporate the business strategy established by CRM to achieve the objectives; Likewise, the necessary technology must be adopted to enable and enforce it.The difficulty of the processes in the execution of CRM does not lie in the identification of the processes to be included; but in the acceptance of the company, develop measures to evaluate the effectiveness of new processes and implement the necessary technology to enable and enforce them. Organization. The organizational structure is the least attended component in the execution of the CRM; The creation of interdisciplinary teams is effective when the purpose of these is to meet and execute new types of campaigns, thus, select members of each team must participate in activities to accelerate the transfer of knowledge and advice to their colleagues throughout the process.develop measures to evaluate the effectiveness of new processes and implement the necessary technology to enable and enforce them. Organization. The organizational structure is the least attended component in the execution of the CRM; The creation of interdisciplinary teams is effective when the purpose of these is to meet and execute new types of campaigns, thus, select members of each team must participate in activities to accelerate the transfer of knowledge and advice to their colleagues throughout the process.develop measures to evaluate the effectiveness of new processes and implement the necessary technology to enable and enforce them. Organization. The organizational structure is the least attended component in the execution of the CRM; The creation of interdisciplinary teams is effective when the purpose of these is to meet and execute new types of campaigns, thus, select members of each team must participate in activities to accelerate the transfer of knowledge and advice to their colleagues throughout the process.The creation of interdisciplinary teams is effective when the purpose of these is to meet and execute new types of campaigns. Thus, select members of each team must participate in activities to accelerate the transfer of knowledge and advice to their colleagues throughout the process.The creation of interdisciplinary teams is effective when the purpose of these is to meet and execute new types of campaigns. Thus, select members of each team must participate in activities to accelerate the transfer of knowledge and advice to their colleagues throughout the process.
CHAPTER 3 Customer Loyalty
Según Beuchat Shaw, Guillermo et al. (2007) la mirada que plantea el CRM ha estado presente desde que existen vendedores y compradores y que tienen que ver más con la forma en que una empresa se relaciona con sus consumidores que con la tecnología que utiliza con este fin la que transforma en un medio que permite aumentar la capacidad propuestas de valor mas segmentadas y especificas. El antiguo vendedor de una empresa de retail de barrio, lograba una relación muy estrecha y fructífera desde el punto de vista de las ventas, de la lealtad y fidelidad que se generaba. Este mantenía una libreta personal con la visita de los clientes y contactos de negocios. Anotaba las fechas de nacimientos del cliente y su familia, el inventario que poseía, las ventas de productos mas recientes etc. Esta tecnología tan básica en el almacenamiento de datos en lo que ocurría en la relación, permitía ofrecer propuestas de valor diferenciadas por cliente basadas en la lectura y análisis de transacciones e interacciones registrada en su cuaderno.
The loyalty process, together with the CRM concept, obeys the same logic above, but with the help of technological elements. This allows the management of the relationship with the client, to be the property base of the process of income generation for the company.
In other words, a retail company that relies on information technology for customer loyalty can be seen in Figure 1.
Customer Contact Points
Figure 1
According to Cánepa Pablo Luís et al (2007), the technological support to achieve loyalty allows the handling of very large volumes of data and integrated clients from different sources, introduces a sophisticated analytical capacity and brings technology to the point of contact which in many interactions replaces personal visit. The new concept of loyalty involves the ability or intelligence of a company to capture and evaluate the needs and characteristics of customers, their consumer behaviors, interests and requirements.
Therefore, the CRM according to Beuchat Shaw Guillermo et al. (2007) involves implementing Data warehouse tools (the historical accumulation of company data) and data mining (extraction of useful data from a larger database) to increase fidelity due to:
- It allows segmenting customers and personalizing the shopping and service experience in each of the segments they receive at the contact points. Developing direct marketing according to the needs and behavior of the customer base. Designing and developing new products. Detecting opportunities for new sales and improve customer service processes.
From this valuable information detected in the contact points, one of the most effective tools for customer loyalty can be implemented, one-to-one Marketing that originates and is understood from the relationship established by the company with its customers based on the finished knowledge of the real needs of the consumer.
CHAPTER 4 Case of Audi Dealers in Mexico, a Luxury experience
According to Cánepa, Pablo Luís et al. (2007) when the automotive industry, especially Audi, that began operating in Mexico in 1997, entered a market that was experiencing intense growth. In 15 years, vehicle owners increased from 5 to 35 brands. Globalization and new technologies to meet the changing needs of customers were clear obstacles for the company that produced luxury vehicles, although the successful application of the CRM model was an ally that allowed it to make a difference.
In its first decade, Audi managed to position itself in second place in the Premium segment in Mexico, only in its first year it placed 195 units in its dealerships in Mexico City, Guadalajara and Puebla. The following year, its sales grew by 533% thanks to the opening of new dealerships in Monterrey, León, Mérida and Cancún.
But increasing competition forced the German company to find new ways to make its exclusive products preferred by demanding Mexican consumers. In this context, the application of CRM arose to obtain the loyalty of increasingly reluctant clients to marry a certain brand.
At Audi Mexico, the implementation of CRM meant the development of a new work culture, in which all employees are clear that nothing they do makes sense if the result they obtain is a drop in customer satisfaction rates. The Mexican model also became a recognized bechmark for the company in the rest of the world.
How it was made?
The development of audi's strategy to strengthen ties with customers and deepen the value of the brand in its target segment went through defining what would be its vital points in the short, medium and long term.
Short term: For the first two years of life, the implementation focused on product communication and the opening of premises or dealerships with a distinctive hangar-like architecture to begin to differentiate itself from the competition.
Medium term: The communication between the product and the brand began to be balanced. A positioning based on advanced technology, sportsmanship was developed and finally, the foundations of CRM implementation were laid with a “ONE-to-ONE marketing” (or direct marketing) campaign.
Long-term: Communication focused entirely on the brand (solidly positioned in the consumer's mind) and work began on initiatives aimed at generating what they called an internal customer-oriented culture.
The implementation of the CRM strategy was also based on a series of pillars for the organization.
Thanks to its strategy, the automaker currently has a refined database that includes 92% of its customers. With it, she has prepared the profile of each market segment (from socioeconomic topics such as age or sex to other psychographic types such as lifestyle). In addition, she is achieving 85% efficiency in telemarketing campaigns, a very high figure according to standards.
Finally, the company has implemented Audi Information Systems, a tool that automatically updates the information collected from prospects and customers in dealerships throughout the republic in the corporate database.
What if and what not
The good results of the implementation of the CRM model at Audi should not lead to the belief that a software will generate customer loyalty. The choice of computer programs will be, if the right thing is done, the last decision to be made. An example for skeptics, at Audi de México we started with a simple Excel spreadsheet.
CRM is a more corporate-level strategy than a technological tool, so it is necessary to also review the other elements present throughout the organization (in addition to the strategy, structure, processes and culture)
Until the core processes for generating value (for the client) in the company are identified, the personnel are not trained (in their entirety, not just the marketing ones) and they are focused on delighting the clients, the CRM programs will simply be isolated loyalty-building aspirations.
CONCLUSION
The implementation of a CRM programs in the retail industry is very useful and culminate with success when top management is involved to generate this change of mentality since the company will be focused on the customer. CRM goes beyond operational software; it is a change in the way the company operates.
This involvement implies obtaining technological tools and communication between all the departments of the company, the more open people are to sharing information, the more feasible will be the success in the implementation of a CRM program.
CRM according to Tere Lucio (2005), is a business strategy that mixes strategy, processes, technology, segmentation and organization together with a paradigm shift with the idea of being able to predict the customer's purchasing behavior. As the strategy is focused on the client, the participation of marketing, customer service and sales comes to play a fundamental role, mainly in the contact points where the client decides what to buy. For this reason, the distribution channels must be prepared to support customers along with the integration of processes to provide in a timely manner what the customer needs.
Thanks to the information detected at the contact points, one of the most effective tools for customer loyalty can be implemented "one-to-one" Marketing that originates and is understood from the relationship established by the company with its customers based on in the finished knowledge of the real needs of the consumer. This information happens to be very useful since it allows us to understand how the client acts, what their needs are and how the company must face them.
Finally, the Audi Case shows us a real case of how the dealerships collected relevant information from their customers, achieving 85% efficiency in telemarketing campaigns, a very high figure according to industry standards. The good results of the implementation of the CRM model at Audi should not lead to the belief that a software will generate customer loyalty but to a business philosophy based on the customer and their needs.
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