CRM in Retail: An Eyewash

Phil Olivieri

CRM in Retail: An Eyewash

Chakradhar:

Loyalty programs are, by and large, tactical programs that should be aligned with a company's CRM strategy, which in turn, should be linked with that company's customer mission and vision.

Most retailers' loyalty programs "buy the customer" by offering points via coupons in return for a desired behaviour, i.e., spend more money with us (usually based on the condition of a minimum spend threshold) and earn more rewards points.

What most companies fail to realize is that loyalty programs, in their current state, don't engender customers to be loyal.

I don't want to debate the issue of loyalty programs as opinions abound from across the globe; however, suffice to say, from my perspective as a consumer and as a CRM strategist and practitioner, I don't think they work in the true sense of building loyalty.

I wasn't clear on your connection between loyalty programs and data mining, but will provide my perspective below.

Data mining, or advanced statistical analytics, allows companies to understand customer behaviour through descriptive models (segmentation) and to predict the best likelihood of a desired behaviour, i.e., cross-sell, up-sell, attrition models, etc. The mistake that most companies make, to your point of not making sense to customers, is they rely too heavily on analytics, which only explains what happened, without any consideration for why it happened. Knowing the "why" helps to uncover qualitative insights that allows a company to create and deliver meaningful and relevant value.

As a CRM best practise, companies should also seek customer feedback through custom research to understand the attitudinal drivers behind why customers behave the way they do. The combination of behavioural segmentation, predictive models and attitudinal research results in a more holistic profile of the customer and/or segments, from which to create and deliver meaningful and relavant value to its customers.