Royalty or loyalty?

Eventhough CRM programmes are crucial for retailers, and presumably work wonders for their businesses, there is a considerable section of the population that remains discontent. This has particularly to do with the cumbersome policies/procedures and a lack of transparency in the working of the programmes. The consumers apparently do not repose much faith in events/promotions conducted by retailers as part of their CRM. This is despite the fact that retailers dole out substantial amount of money towards making their loyalty programmes a success.

Harish Bijoor, CEO of Harish Bijoor Consults views, “Most CRM programmes, except those that operate in the niche and high-end hospitality segment, are just not working. There is a great degree of dissonance in delivery terms. Customers are being taken for granted, and CRM programmes are being run with objectives that are not centered to the repeat-sale creating desire of the organisation.”

Rakhee Nagpal, Chairperson and Managing Director of Dynamic Verticals Solutions, mentions that lack of customised services and senseless corporate bureaucracies, poor staff training and lack of customer data authenticity are some of the reasons that have led to customer dissatisfaction and consequent ineffective CRM programmes. Nagpal also states, “Customer feedback is the most important for the success of a CRM programme and completes the loop, ensuring complete involvement of customers at all levels.”

Feed back to feed forward

So when it comes to utilising customer feedback and adapting to their loyalty management programmes, how active have Indian retailers been? Thomas Varghese, CEO of Aditya Birla Retail Limited (ABRL) states, “The customers’ needs are dynamic and keeping pace with them is the key to stay relevant. We try to deliver superior savings, better quality of products, great choice and extra care to our customers. The Customer Service Assistants are trained rigorously to ensure that our customers feel being part of trustworthy company. Our reviews and customer contacts over the current and previous years lead us to believe that our customer proposition is rated very highly among our customer base - thus giving us a natural advantage in the catchments we operate.”

An important aspect of customer data reviews is the CRM audit function. It is an extremely detailed process which includes analysing a retailers’ sales data, efficiency of his current loyalty initiatives, interviewing key internal stakeholders of the company, the customers and others. Audit is a must and should be done independently and regularly. It can lead to better controls and also improvements in the programme if done on time and correctly.

Kunal Bahl, CEO of Jasper Infotech concurs, “Not many retailers today are active with their CRM audit processes. Retailers exhibit urgency in launching the loyalty programmes, but investment in tools, which can measure the effectiveness of their programmes, is the key for making them a success.”

Bahl also says, “Most of the loyalty programmes are not very transparent in terms of the utility to the customer. The information is not easily available. There could be higher transparency in terms of the applicability and the benefits of the programme.”

Counters Varghese, “We have a strong internal audit programme which regularly assesses the design and implementation of our CRM processes and suggests improvements. These are discussed and agreed with the relevant teams and then tracked over time. Typically an audit happens every two years.”

Transparency transpired

Another aspect related to transparency is the management of gifting events/promotions organised by retailers to reward their loyal customers. Although prominent CRM programmes like The Inner Circle (Lifestyle Stores), Clubwest (Westside), First Citizen (Shoppers Stop), Green Card (Pantaloons) have been claimed to be managed well, so far, there are a number of others which have just not launched yet on the road to ideal CRM practices. Time is yet to come to see a CRM programme that really engages customers and connect them with the brand stronger. Most CRM programmes are ineffective in increasing loyalty indexes significantly, and have only marginally impacted sales. Its time people reviewed their investments in CRM programmes and overhauled them to deliver on both counts.

Sharing details about customer feedback on the Clubmore loyalty programme of ABRL, Varghese states, “Indians by nature are polite and accepting of faults in others. Hence, most surveys throw up very high satisfaction rates and endorser scores (upwards of 80 per cent). We go further to analyse these responses to benchmark our scores to the ideal performance and continuously strive to reach newer heights. Over three years, our trial rates in all our catchments have crossed 60 per cent, and we are the leading player in over 80 per cent of our catchments.”

Further on the transparency measures at ABRL, Varghese informs, “Each activity is carved out with intense analysis of our customer shopping history and purchase behaviour to ensure that we reward our shoppers extraordinarily. Our employees are excluded from participating in any lucky draw or similar events / promotions and we make sure that all announced rewards are delivered to the winners within the stated timelines.”

That said, it makes sense to take a comparative perspective on CRM in India and that in a developed market like USA. As per Colloquy estimates (CRM journals publishing and consulting company), there were 1.807 billion loyalty programme memberships in the US (a 25 per cent increase from their 2006 census) in the year 2009 - with the average US household participating in 14.1 programmes. Approximately 56 per cent of those memberships were inactive (defined as no engagement within a 12 month period), bringing the average household active participation to 6.2 programmes. This is in contrast with the trends in India where the market is still fallow with fewer players to tap customer loyalties. Clearly, it is too early to evaluate the success or failure of any CRM programme in the country. Varghese states, “We operate in a category which has very set patterns established over hundreds of years. Grocery and apparel shopping, for example, have a large base of traditional outlets, with shopping patterns ingrained in the customer’s mind. Hence, we have relatively slow adoption rate initially, which will pick up pace as critical mass is approached and then accelerate till almost the whole potential has been realised.”

Bahl concurs, “In the long run, employing CRM programmes will definitely yield results to the retailers, both, in terms of customer retention and new customer acquisition. Cost-benefit analysis of the same will make a lot of sense, if the long term value of a customer is considered.”