Why CRM is the new ERP

Editor's Notes

• #2: Hello and welcome to the second part of our CUSTOMER ENGAGEMENT MASTERCLASS, entitled “CRM is the New ERP; with Raymark and Retail TouchPoints. We are very excited that you could join us today and we hope you will find this session informative.
• #3: Before we start today’s meeting, we’ll just go over a few navigation pointers about the GotoWebinar service. Currently everyone except our panelists are muted in order to ensure the best audio quality possible. To ask a question, type it in the question tab that is located in the control panel to the right of your screen. We will take questions at the end of the session and there is a show/hide button on your control panel if you wish to minimize the panel at any time during the webcast. With that being said, we will now begin today’s presentation, which will last no longer than an hour.
• #4: To start the webinar I’d like to introduce our panelists. Today we are joined by Will Roche, Senior Vice-President at Raymark Will is a passionate, creative leader who has been heavily-involved in the conceptualization of Raymark’s customer centric CRM solution built on the Microsoft Dynamics platform. Having attended Clayton State University and Harvard Business School, he brings with him 33 years of IT experience garnered at both IBM and Microsoft. His retail life began at IBM in the early eighties with the introduction of the first PC-based POS system, the 4680. In 2002, he started at Microsoft, where he led a team charged with managing all of the top retail and hospitality ISVs worldwide. In 2008, he joined Microsoft’s Dynamics division, leading Microsoft’s entry into the retail enterprise applications business with direct involvement in application software acquisitions, partner channel development, marketing and brand awareness, keynote public speaking and publication syndication. Will joined Raymark in January 2012 as Senior Vice-President. We also welcome Danya Rielly, Business Analyst at Raymark. Danya Rielly is a business analyst with over a decade of experience in international retail sales and marketing.  Prior to joining Raymark, she worked as a Commercial Activities Manager at IKEA, where she managed seasonal collections and commercial themes, including all product lifecycle decisions.  In 2010, she became the functional lead on the team responsible for building Raymark’s retail-specific CRM solution. With a BA in Human Relations, Danya understands people and the importance of creating personal relationships. She is passionate about retail marketing and the customer experience, and works closely with retailers to enhance their cross-channel customer-centric strategies. And finally, we welcome Scott Pearson, CEO of Retaligent, a Raymark company. Scott has over 25 years experience in retail and software development and began his tenure with Retaligent as the Vice President of Consulting Services in 2006, becoming COO of the company in 2008. Following Raymark’s acquisition of Retaligent in 2011, Scott assumed the position of CEO. Scott is responsible for the overall direction and management of the Retaligent brand and has significant input into Strategic Direction and Product Roadmap. Scott holds a B.S. in Management and Administration from Indiana University and an M.S. in Management of Technology and Innovation in Retail from NY Polytechnic University.
• #5: As part 2 of the Customer Engagement Masterclass, today’s webinar will take an in-depth look why people, rather than product, should be driving your enterprise. Today’s session will focus on why traditional, product-oriented retailing with ERP at its core is not aligned with a customer-centric approach, and will offer insight on how powering your business with CRM will transform it into a true people-driven organization. Throughout the session, Danya, Will and Scott will discuss: The evolution of retail What IS customer-centric retailing? Why CRM, not ERP, should be at the core of your enterprise Value of obtaining a 360° view of the customer Best practices for implementing clienteling into a customer-centric approach Benefits of incorporating customer metrics into all areas of the retail organization We will end the session with a Q&A.
• #6: To better understand how we got where we are today, let’s rewind for a moment and have a very quick look at how retail has evolved. If we go way, way back, the origins of retail are as old as trade itself. You could say that the first retailers were barterers – I’ve got a product I want to get rid of, and you’ve got something I want. This way of moving product stuck around for centuries, until the rise of industrialization and now globalization. To better understand how we got where we are today, let’s rewind for a moment and have a very quick look at how retail has evolved over time. If we go way, way back, the origins of retail are as old as trade itself. You could say that the first retailers were barterers – I’ve got a product I want to get rid of – maybe a goat – and you’ve got something I want – some copper. This way of moving product stuck around for centuries, until the rise of industrialization and now globalization. Fast forwarding to the past century, the business of retail has evolved much more rapidly, and, in the last decade, has completely turned on its head with the most successful retailers shifting their entire focus from product to customer . From the early 1900s to the early 2000s, as depicted by this diagram from Forrester Research, retailers’ main focus remained product .
• #7: First, how can I make more? Faster? Cheaper? Better?
• #8: Next, how can I move product around the world? Faster? Cheaper? Better?
• #9: Then, how can I use computer systems – driven by ERP software - to help me make and move product? Faster? Cheaper? Better?
• #10: This product-oriented way of retailing stuck around for quite some time, but then, we entered the Age of the Customer, and everything changed. Suddenly, big businesses weren’t the only ones with technology at their fingertips to help them make more informed decisions. The internet happened. Then, smartphones, and tablets, and suddenly, ordinary customers became more informed than even the best retail sales associates were about their own products.
• #11: Today’s customers are savvier. They comparison shop. They know about the store down the street, or the website a click away that has the same product you carry for less.
• #12: Today’s customers are more knowledgeable than ever - they consult ratings, and reviews, and seek out opinions on social media before making important purchases. Retailers can’t rely on even the most convincing sales pitch to help them make a sale, because customers demand more and know better.
• #13: Customers are more in control today than ever before, and in our competitive, global, omni-channel landscape, retailers need to really listen up and pay attention to remain relevant.
• #14: In their classic book “The Experience Economy”, authors Gilmore and Pine state "The more the customer teaches the company, the better it can provide exactly what he wants.“. That’s a good way of describing how a customer-centric retail culture works, and leads us into the next topic, where we’ll take a deeper dive into some of the characteristics of successful customer-centric retail organizations.
• #15: So just how do we learn from our customers? And, how does a customer-centric culture differ from a product-oriented one? Let’s have a look at some of the differences. The contrasts really span across the whole organization, and should implicate People, Processes, and Technology.
• #16: For instance, in a product-focused culture, the sales associates typically need to be incredibly persuasive, whereas in the customer-centric culture, the customer approach is more personal and tailored. This often results in a more pleasurable experience for customers.
• #17: Whereas a product-focused retailer can get away with a siloed organizational structure, the customer-centric retailer requires a LOT more collaboration – everyone from supply chain to sales and marketing needs to take an interest in the customer. It’s not enough anymore to have a customer service department and call it a day.
• #18: In a product-focused culture, we see more mass marketing, “this widget is on sale, and we’re telling everyone and their mother”, whereas the customer-centric retailer will target their communications “since you love this author, here are some of their latest books”. Customers today are bombarded with thousands of brand messages every day – the only way you will really resonate is if your message impacts them in a personal way. As a rule of thumb, 20% of your customers will provide 80% of your profit. Your efforts are better spent retaining these top customers with targeted messages and personal service rather than trying to be all things to all people.
• #19: Mass marketing is also expensive, and difficult to track. “Who responds well to my campaigns, and why? Where am I wasting my dollars?” Personalized marketing, however, can be measured at every touchpoint: “Who opened my e-mail? Who clicked on a link? How much time did they spend on the website? Did they make a purchase following my e-mail? What did they buy?”. You can really get a clear picture of who’s responding to your marketing strategy and how, providing you with information to help continually refine your target market and communications.
• #20: Overall, when we think of product-focused retailers, we think of words like “push” and “top-down” : it’s a fairly rigid approach. Since the customer-centric retailer “pulls” from market demands by listening to their customers, they need to remain flexible and adaptable to changing consumer wants.
• #21: Returning to our chart, finally, there’s a need for technology that supports the culture, and it makes sense in a product-focused organization to have ERP at the core, driving business decisions. But, in a truly customer-centric organization, ERP just doesn’t cut it. If we want to truly understand our customers and use this knowledge to make more informed decisions, CRM is the only way to go. And that’s why CRM is the new ERP. I will now turn the presentation over to Will Roche, who will delve a little deeper into the Customer-centric retail ecosystem. .
• #22: So, what does a CRM-centered architecture look like? I call it a Customer-centric Retail Ecosystem. The heart of the Customer-centric Retail Ecosystem is CRM: customer insights contained in a single centralized database, combining information from across all channels and providing a single view of the customer. That CRM in turn feeds critical data to connected applications throughout the ecosystem via a layer of BI. This BI layer looks for trends and correlations in customer demographics, purchases, behaviours and more. With integrated systems, the identification of these trends and correlations can initiate intelligent processes and be used to make informed decisions at every level of the organization. Let’s look at some examples.
• #23: We’ll start with Operations. How can customer data influence operational systems, people and processes?
• #24: Here’s one example. Using customer profiles, preferences and past purchases along with Business Intelligence association rules, display personalized product and promotion recommendations on mobile Point of Sale devices. For instance, the matching bracelet for a jewelry collection in which your customer has begun investing. You could even recommend replenishment products: mascara is only good for 90 days, after all. Use business rules to display only products you wish to promote, for example, those with high margins or availability. You’re guaranteed more success than if you show the same generic specials to every customer. With CRM at the core of a connected retail ecosystem, the same logic could be used to send these personalized recommendations to the web, Clienteling applications, kiosks and even SMS or apps on mobile devices.
• #25: Another insight reinforcing this ideology comes from Peter Drucker, who wrote “The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself.”
• #26: So, customer data can be used to enhance the in-store experience and make it more personal, even during operational tasks like checking out. But now, let’s look at one example of how merchandising can be made more efficient when we feed systems with customer data and insights garnered from BI.
• #27: Imagine this: You’ve had an increase in 18-24 year old women shopping in your East Coast stores. The “18-24 year old women” customer segment favors certain brands. Your assortment planning system, supplied with these customer insights that were picked up using Business Intelligence trend identification, and governed by configurable business rules, will make appropriate recommendations to the buyer to purchase more of the brands these 18-24 year old women favor. Suggested POs are generated based on predictive trends using customer data from all channels. Following this process and having an architecture that supports it, with CRM at its core, enables customer-centric retailers to localize their assortments and to have the right products, at the right place, at the right time.
• #28: If you’re still not convinced, how about this little fact: The number one business challenge facing retailers   today is   underperforming inventory (57%), followed closely by out of stocks. RSR Research 2011 Merchandising Study Why? These retailers are still focused primarily on product and have neglected to incorporate customer data into their purchasing decisions. They are stocking the inventory they think customers might want, instead of the inventory customers do want.
• #29: Now, let’s talk about customer engagement. Here, we’re in the world of marketing – personalized e-mails, loyalty programs, social media. This is also where clienteling comes in, and that will be the focus of our next example. If you attended part one of the customer engagement masterclass, you had the chance to learn about how clienteling can be used before, during and after the sale to engage customers in a personal way. Scott Pearson will now guide us through how cross-channel customer data can impact these key moments in the customer lifecycle.
• #30: Before the initial point of contact with a customer, be prepared. Sales associates need to be informed – not only about their products, but about their customers. By putting multi-channel customer data in the right hands, sales associates can prepare for upcoming appointments and reach out proactively to their customers – on a personal level.
• #31: During the sale, arm your sales associates with deep knowledge about customer preferences, past purchases and desires so that they’re well equipped for personalized suggestive selling.
• #32: After the sale, keep the conversation going with customers: thank them for their purchases, send them promotions that will really excite them, and even better, arm them with tools to share the amazing experience they just had by posting to their social networks.
• #33: A critical part of implementing a customer-centric ecosystem is closing the loop: now that you’ve engaged with your customers in your stores using clienteling, at the POS, on your website, in social media, and maybe even in other ways like kiosks, it’s critical to feed that interaction data back into your CRM to enable a continuous improvement process to occur. So, nobody liked that bracelet we suggested at the POS? Loop that data back in, and let’s try something else. Everybody adding the new pair of pumps to their wishlist? Better get some POs out!
• #34: What are some other customer metrics that can influence decisions across the customer-centric ecosystem? That depends in part on your business, so cosmetics retailers may want to know customers’ skin type and eye color, whereas retailers in another vertical may need other indicators. What’s important is that the data is collected, and combined for a 360 0 view of the customer, and that the data is used – it doesn’t sit dormant. It’s put into the right hands. Connected systems and collaborative processes are essential to making the data work for your business.
• #35: Successful implementations we’ve encountered all had this in common: They utilized a retail-specific CRM, built with industry best practices in mind. This helped them collect the right data, and made integrating with retail systems an easier process. Their solutions were built around retail entity models, but they were also flexible enough to adapt to their evolving needs and to their customers ever-changing demands. We said earlier that customer-centric retailers need to be flexible and adaptable, and the same goes for their systems. In the same vein, scalability is another important consideration for successful CRM implementations: your solution needs to grow along with your business. It goes without saying that integration is key: retailers achieve the greatest benefit when data flows flawlessly between systems. And finally, technology is only going to have an impact if it gets used. A CRM solution that’s easy to learn and use will help in user adoption and make the shift easier to manage.
• #36: Technology in itself is never enough - retailers need customer-centric processes and people to support the culture. Clearly defined processes for the collection, storage, manipulation and use of data are essential. Quality of data must be continually refined and checked for consistency. Clear definition must be given to processes that are automated and those that require human intervention. Although data is critical, technology alone isn’t a magic wand. You need to be able to put yourself and the key people in your organization in the customer’s shoes. In fact, don’t just put those shoes on – walk a mile in them. Experience the stores from the customer’s point of view. Shop on your own website. Really live the customer experience. Most importantly, the shift from product-focused to customer-focused retailing denotes a major cultural change that must be supported by key people at every level of the organization, especially senior leaders. Resistance can be expected and must be managed, since the shift to true customer-centricity will bring about significant changes in routines and workflows. For instance, buyers often rely heavily on instinct, and marketers may feel their creativity being stifled. However, both these roles can benefit greatly from increased customer data, and obtaining their buy-in is critical to continued success. Retailers we’ve seen achieve true customer-centricity did so by employing people with the right attitude, experience and qualifications who live and espouse the customer-centric culture every day.
• #37: As our session comes to a close, we leave you with some recommendations to manage the shift to a customer-centric retail ecosystem: Assess your current state – Identify how your organization can become more customer-centric. Where are the opportunities? Take a critical look at data, business units, systems, people, processes, and see where you have opportunities for change. Determine your vision, goals, and objectives. For instance, which customers do you really want to target? Who IS your 20%? Is it really the top spenders? Or could it be frequent purchasers who also double as ambassadors for your brand? Challenge your traditional thinking. Make your plan – remember that this is a re-engineering of your business. It will take time. There may be resistance. Start thinking about key players at different levels of the organization. Next, it’s time for system selection, technology change. Keep in mind some of the points we covered earlier such as selecting a retail-specific CRM solution and one that will scale and adapt as your needs change. Cultural change, organizational alignment, responsibilities, and rewards. Offer incentives and obtain buy-in from key players. Implementation, execution. Measure, refine. Create benchmarks that will help you determine the success of your implementation, and use those benchmarks to continuously refine your plan.
• #38: And now we’d like to answer some of the questions you have been sending to our chat room during the session.
• #39: Thank you for listening we are now going to bring the session to a close.
• #40: To see what customer-centricity looks like from your customer’s perspective, check out our latest video on www.raymark.com
• #41: Questions: What are your expectations for CRM in the next five years? What are the most common mistakes you see companies make with CRM? Who owns CRM? Does CRM fall more to sales or marketing in most organizations? How do you see social media impacting CRM in the future? How can retailers benefit from social CRM? I’m a marketing director who sees a lot of value in implementing CRM for my business. How can I obtain buy-in from my CEO, CIO, CFO?