Retailers have unique requirements that are only satisfied with CRM software built for the retail industry.
CRM software for retailers is designed to accommodate industry specific requirements such as consumer insights, consumer segmentation, a 360 degree consumer view, retail marketing, retail selling, Customer Experience (CX) management, loyalty programs, omni-channel engagement and consumer-based customer service.
The top 4 retail CRM software systems, as measured by market share and market growth, are Salesforce, Oracle CX, Microsoft Dynamics and SAP CRM.
CRM Software for Retailers is Different
Customer Relationship Management (CRM) software for retailers is different when compared to other industries. It’s not about account, contact and opportunity management. It’s about retail imperatives such as the consumer experience; retail essentials such as omni-channel engagement and loyalty programs; retail processes such as sophisticated pricing, discounting and promotion; and technology requirements such as real-time integration with e-commerce, point of sale (POS), supply chain management (SCM) and enterprise resource planning (ERP) systems.
The best retail CRM software recognizes that the sales process isn’t about a considered purchase, it’s about Clienteling or satisfying a moment of truth in the consumer journey, and marketing isn’t about nurture campaigns supporting long sales cycles, it’s about precision campaigns based on highly specific consumer segments and delivered in social, mobile and customer preferred channels. Be clear, CRM software for retail is different.
When searching for the best retail CRM software many novices evaluate technology features. That’s a mistake as CRM software features and functions may or may not deliver business results. A better approach is to lead with the most strategic business objectives and then identify the CRM software capabilities that directly accelerate those goals.
The four most strategic retail CRM objectives are to acquire more consumers, grow consumer share, increase consumer retention and lower marketing, sales and customer services costs.
CRM Software to Grow Consumer Acquisitions
The best CRM software for retailers supports this objective with several important capabilities.
Consumer Insights. In order to achieve effective marketing, sales and customer service, retailers must really know their consumers and what they want. Inaccurate assumptions or not really knowing what consumers want will degrade your marketing and sales effectiveness and set back business results by quarters or years. Consumers are not homogenous so they must be identified by persona and segment. Retail CRM software capabilities to support this requirement include Voice of the Customer (VoC), crowdsourcing, tracking of digital footprints, insights dashboards and a 360 degree consumer view.
360 degree consumer view. Every CRM vendor claims to deliver a 360 degree customer view. But most don’t. At least not for retailers. What most deliver is a customer view with demographics and purchase transaction history. It’s a start, but consumers are far better defined by their behaviors than their demographics. Demographics are explicit data while behaviors are implicit data. Explicit data such as age and income only indicate how interested the retailer is in the consumer. Implicit data such as online behaviors, digital footprints, emotions and a social profile show how interested the consumer is in the retailer. To achieve a 360 degree consumer view in the retail industry you need 5 types of consumer data – demographic, transactional, behavioral, environmental and social.
Consumer segmentation. Retailers need to be able to target offers based on consumer audiences, preferences and offer conversion history. The best retail CRM software creates dynamic segments based on explicit and implicit traits. Explicit data such as demographics is a start, but implicit data such as real-time digital and behavioral data dramatically enhance segmentation with attributes and dimensions that more accurately predict intent and demand. The bottom line is that the more precise the segmentation, the higher the conversions.
Retail marketing. Marketing effectiveness is driven by combining precise customer profiles and segments with relevant and personalized offers delivered on the right channel at the right time. The best retail CRM software uses personas and consumer journey mapping to orchestrate these variables.
Retail marketing software supports flexible, non-linear journeys and measures each milestone or moment of truth in the journey to assess its effectiveness in getting the consumer to the next step, and to a purchase. It can identify bottlenecks, loopholes and fall-off points and even compare different responses to identify the optimal journey map.
Other retail marketing capabilities include list management, multichannel campaign execution, conversion rate optimization and marketing resource management. The best retail CRM systems will go even further with functionality to support mobile, proximity, social, contextual and SoLoMo campaigns.
Retail Sales. Sales in the retail industry are delivered through e-commerce, POS and Clienteling. CRM for retail supports these sales methods with guided selling automation, relevant promotions, intelligent up-sell, cross-sell and bundles, and Next Best Offer recommendations.
The more advanced retail CRM systems also include price optimization, strategic pricing, discount policies and capture management – all delivered over multiple channels.
As an example, fewer than one in ten retailers leverage CRM clienteling tools, which results in a lost opportunity for building personal relationships between consumers and associates. In fact, consumer research consistently shows that personal attention makes the difference between browsing and buying.
Clienteling delivers personalized customer service using mobile devices such as tablets or portable POS terminals. This engagement technique empowers sales associates to provide deeper product content, real-time promotions, inventory availability, cross-sell and up-sell suggestions, other product recommendations based on consumer attributes and prior purchases, mobile check-out, portable payment processing, shipping information and a 360 degree view of the customer relationship (including style and brand preferences, prior purchases, active warranties, loyalty program information, key dates such as anniversaries and birthdays, and more.) It’s also an effective method to reduce showrooming. Most importantly, it aids the delivery of an exceptional in-store customer experience.
CRM Software to Increase Consumer Share
Returning consumers spend on average 67 percent more than first-time consumers (source: Bain and company) and in several retail sectors up to 15 percent of a brands most loyal customers account for 55-70 percent of the company’s total revenues (source: The Center for Retail Management at Northwestern University).
CRM software for the retail industry offers capabilities to increase return visits, repeat purchases, customer lifetime value (CLV) and customer share.
Accelerated product commoditization coupled with more informed, connected and empowered consumers requires retailers to step up their game. Customer Experience (CX) management has become the go-to customer strategy to create what may be the most strategic and sustainable competitive differentiation. Retail CRM software aids this strategy by applying data to deliver differentiated customer experiences.
CRM software facilitates end-to-end consumer engagement journeys over physical, digital, social and mobile channels by applying consumer personas, preferences and purchase histories in a way that delivers relevant, personalized and contextual consumer experiences.
The applications can also measure each consumers customer experience using RFM analysis or methods such as NPS (Net Promote Score) or CSAT (Customer Satisfaction) scores.
Customer loyalty. Loyalty systems provide the enabling technology to help advance consumers from browsers to buyers to repeat customers to advocates.
Retail CRM systems support the most strategic goals of using loyalty programs to grow customer intelligence, increase customer lifetime value, increase margins with the most profitable customers and shift consumer loyalty from products to the brand.
The best CRM software for retailers supports loyalty or rewards programs that include progressive loyalty tiers, point account management, flexible rule modeling, benefits handling, voucher handling, performance metrics (such as reward rates and break rates), and direct integration with POS and digital commerce platforms. They also integrate with the retail marketing application to deliver personal and relevant promotions that are likely to convert.
Omni-channel engagement. In a research report titled, Satisfying the Omni-channel Consumers Whenever and Wherever They Shop, IDC Retail Insights reported that while multi-channel shoppers spend, on average, 15% to 30% more with a retailer than consumers who use only one channel, omni-channel shoppers will spend 15% to 30% more than multi-channel consumers and exhibit stronger brand loyalty, often swaying others to patronize the brand.
That’s why meeting consumers on the channels they search, communicate, evaluate and buy, and accommodating their communication and purchase preferences is an undeniable mandate for retailers. And a mandate enabled with retail CRM software.
Consumers expect that a conversation that starts on one channel can be continued on another, with all communication and context preserved across channels. That’s why the best retail CRM systems maintain conversation fidelity as conversations traverse multiple channels. They also offer social listening tools to identify consumer conversations about the brand or its products, and social engagement tools to communicate on social networks.
Customer Relationship Management. All merchandise becomes commoditized over time thereby making product-centric retailers vulnerable. Fortunately, consumer relationships don’t deteriorate over time giving customer-centric retailers a more sustainable competitive advantage.
The “R” in CRM (Customer Relationship Management) is where the most strategic opportunity occurs, or fails to occur.
Consumers want to engage with their preferred brands pursuant to their terms and using their personal technologies. Retailers that apply Customer Relationship Management (CRM) strategies and technologies to engage consumers and nurture consumer relationships can find that these relationships trump every other competitive differentiation factor for certain classes of consumers, such as loyalty members, repeat customers and high value customers.
CRM Software to Increase Consumer Retention
Consumer churn is like a disease. Left unattended it only gets worse.
Fortunately, the best CRM software for retailers provides tools to decrease churn. These tools include customer self-service (portals, knowledgebases, social service, bots, virtual agents, communities) and business intelligence (BI) that quickly detects where the retailer has a problem.
CRM BI capabilities include data quality tools, data enrichment tools, data transformation pipelines, dashboards, artificial intelligence (AI) and machine learning (ML).
Some retail CRM systems calculate consumer health scores and use predictive analytics to detect consumers at risk of churn. They further use predictive analytics to forecast buying patterns, offer responses, sales conversions and up-sell lift. It’s the BI that can account for seasonal trends, halo effects, cross category relationships and figure out how to get the right product at the right price on the right channel and the right time.
Peter Drucker may have said it best when he advised that “Knowledge has become the key economic resource and the dominant–and perhaps even the only–source of competitive advantage.”
I’m constantly asked what are best CRM systems for retailers? The short answer, based on market share, market growth and my experience in implementing CRM systems at retailers for more than three decades, is Salesforce, Oracle CX, Microsoft Dynamics 365 and SAP CRM. The longer answer and a deeper analysis is available at the top retail CRM systems.
If you are evaluating CRM software, consider our CRM selection framework to identify the best CRM software.