Customer Relationship Management

in Retailing
RELATIONSHIP MARKETING INVOLVES
CREATING, MAINTAINING, AND ENHANCING
STRONG RELATIONSHIPS WITH CUSTOMERS.
RELATIONSHIP MARKETING IS AN ON GOING
INTERACTION BETWEEN A BUYER AND A SELLER IN
WHICH THE SELLER CONTINUOUSLY IMPROVES ITS
UNDERSTANDING OF THE BUYERS NEEDS AND THE
BUYER BECOMES INCREASINGLY LOYAL TO THE
SELLER.

IT GOES BEYOND CONVENTIONAL MARKETING AND

SEEKS TO ESTABLISH AN ENDURING RELATIONSHIP
WITH THE CUSTOMERS.

 Modus operandi
THE COMPANY HOPES TO CONVERT MANY OF
ITS QUALIFIED PROSPECTS IN TO FIRST TIME
CUSTOMERS, AND TO THEN CONVERT THOSE
SATISFIED FIRST TIME CUSTOMERS INTO REPEAT
CUSTOMERS.

BOTH FIRST TIME CUSTOMERS AND REPEAT

CUSTOMERS MAY CONTINUE TO BUY FROM
COMPETITORS AS WELL.

THE COMPANY THEN ACTS TO CONVERT

REPEAT CUSTOMERS IN TO CLIENTS

THE NEXT CHALLENGE IS TO TURN

CLIENTS INTO ADVOCATES, CUSTOMERS
WHO PRAISE THE COMPANY.

THE ULTIMATE CHALLENGE IS TO TURN

ADVOCATES INTO PARTNERS, WHERE THE
CUSTOMER AND THE COMPANY WORK
TOGETHER ACTIVELY.
IN RELATIONSHIP MARKETING THE FOCUS
IS ON RETAINING THE CUSTOMER AND
GETTING THE REPEAT BUSINESS.

 HENCE THE QUALITY OF PRODUCTS, SERVICE

AND DIRECT CONTACT WITH CUSTOMERS
RECEIVE A HIGH PRIORITY.
THE BASIC PHILOSOPHY UNDERLYING RELATIONSHIP
MARKETING IS THAT THE GOAL OF ALL MARKETING
ACTIVITY SHOULD BE THE ESTABLISHMENT OF
MUTUALLY
BENEFICIAL
PARTNERSHIPS
WITH
CUSTOMERS.

HENCE THE CHALLENGE TO MANAGEMENT IS TO

DEVELOP
MARKETING
STRATEGIES
THAT
ARE
DESIGNED
TO
CREATE
ENDURING
CUSTOMER
RELATIONSHIPS.

Indicators of Effective Relationship

Marketing in Retailing
A high level of commitment between
consumer and retailer
A high level of trust between
consumer and retailer
Open communication channels
between both parties with free
exchange of information
Retailer having the consumers
interest at heart

 A commitment to quality for both

parties
An attempt by the retailer to
favourably lock-in or retain the
customer

CRM Strategies in Retailing

CRM Strategies refer to any effort that is
actively made by a seller towards a buyer
and is intended to contribute to the buyers
customer value above and beyond the core
product and / or service efforts received
,and can only be perceived by the buyer
after continued exchange with the seller.
Hence, CRM strategies attempt to provide
benefits to the buyer beyond the core
service performance.

 For instance, many traditional Indian

retailers treat the regular customers
in a warm and personal way and also
provide them with special in terms of
home delivery, discounts etc. These
benefits are an attempt to provide
benefits in addition to the core
service performance.

 CRM strategies could be a

combination of one or all of the
following benefits ;

Personalization benefits
Special treatment benefits
Rewards
Communication benefits

Personalization Benefits
Personal exchanges between buyers
and sellers are important in
influencing the quality of
relationship.
In certain situations, sellers and
shoppers may develop buyer-seller
relationship akin to personal
friendships.
There are many personalized
shoppers who appreciate personal

 In fact , sometimes the social interaction

works as a prime motivator for some
consumers to visit retail establishments.
These people consider retail encounters as
valuable sources of social contact.
Personalization refers to the way in
which employees relate to customers
as people- cold and impersonal on the
one end, and warm and personal on
the other.

Special treatment Benefits

Consumer focus and selectivity, i.e, all
consumers do not need to be served in the
same way, is a key aspect of CRM.
If a consumer receives personalized,
customized service from retailer A but not from
retailer B- and if this service is valued- then the
consumer will be less likely to leave retailer A
for B.
Customers, generally, perceive such
customization efforts as preferential treatment
not normally provided to the other customers.

 The retailers can distinguish between atleast

two identifiable customer segments ; loyal
customers and non-loyal customers.
Differentiating between loyal and non-loyal
buyers enables a seller to address a persons
basic human need to feel important.
Most retailers use core-service upgradation
and service augmentation as ways to provide
special treatment benefits to customers in
return for their loyalty.

Communication Benefits
Communication is often considered as a
necessary precondition for the existence of a
relationship.
A sellers communication with a buyer conveys
their interest in the buyer and serves to
strengthen the sellers relationship with the
latter.
Efforts to stay in touch with the customers
have been identified as the key determinants of
relationship enhancement in retailer-customer
relationship.

 Generally, communication strategies as part of

CRM efforts refer to direct communication to the
customers, as against mass-media
communication, which does not afford selectivity.
However, it does not include face to face
interaction, which forms part of the
personalization efforts by the retailer.
Many retailers adopt direct mail, e-mail,
telephone, and SMS as means to interact with
their loyal customers or members of loyalty
programmes

Rewards
Providing customers with tangible rewards
is often referred to as level one CRM. This
level of CRM relies primarily on pricing
incentives and money savings to secure
customers loyalty.
It implies that clients earn extra based on
purchasing performance.
As opposed to the previously discussed
relationship efforts, rewarding efforts are of
a more functional, economic nature.