The rise of B2C CRM & personalization: Retailers combat convenience

In The Future of Retail, Loup Ventures laid out a vision for the future of retail amidst the continuing consumer shift from offline retail shopping to online.  To combat the shift towards pure convenience, and provide an enhanced in-store customer experience, retailers have started implementing business-to-consumer (B2C) customer-relationship management (CRM) programs to more effectively tailor product offers and services to its customers and drive traffic to their brick-and-mortar locations.

Traditionally, CRM systems and programs were utilized by large companies to manage sales cycles into other businesses (B2B sales).  However, retailers and consumer-focused companies have started to adopt the technology to better understand purchasing habits and interactions to improve customer engagement.  At some retailers, this personalization and data-capture is taking place through loyalty programs or branded credit cards but others are expanding these programs to better serve customers daily through a complete purchase profile.

A great example of CRM in the form of a loyalty program is Nordstrom’s which expanded its loyalty program in 2016 to include all customers (i.e. non-credit card holders).  Loyalty members earn points towards vouchers so long as they provide their phone number – which acts as their ID number.  With a profile and Guest ID/phone number, associates can easily view a guest’s purchase history so, for example, a customer can easily make a return without a receipt or associates can identify the customer’s size in a brand (if they purchased that brand before).  It’s not hard to imagine a future state where there’s a rich database the company can pull from to deploy evolving artificial intelligence (AI) and, at a meta-level, better predict buying trends and, on a personalized level, understand when its best customers walk into their stores and how to best cater to them.

 

These CRM programs and personalization are rapidly expanding, particularly among higher end retailers that focus on high-touch customer service.  A recent example of a company that is implementing a CRM system is lululemon athletica.  As laid out by one of its executives, Gregory Themelis, lululemon seeks to better understand the engagement consumers have with their brand across three levels: transactions, sweat, and engagement.  In this sense, lululemon is seeking a more holistic understanding of the customer (vs. just understanding sales/transactions).  Through data and being “informed” by it (vs. being driven by data), lululemon will be able to better engage customers by tailoring the right level of personalization along with creating seamless marketing across all channels.  lululemon is taking a much more brand-oriented approach to drive customer engagement through a personalized one-on-one experience to build a community.  In the CRM and personalization model, it’s easy to understand how a retailer, such as lululemon, could add more value to its customers in the future by sharing personalized suggestions (workouts, restaurants, etc.) to drive brand affinity and subsequently drive traffic and sales.

Whether it be through the implementation of loyalty programs or pure CRM, personalization is a concept that retailers and consumer brands are adopting to drive traffic to their locations and enhance the customer experience.  In a world that has come to value convenience, personalization and high-touch service is a way for these companies to continue to differentiate themselves and, in the future, use AI to predict customer behavior and serve them even more effectively.

 

Carlos Castelán