Excuse me, are you a repeat customer?

As it is easier to retain existing customers than to acquire new ones, retailers should learn to understand them from the minute they pass the cash register.
Written by Gregory Teo, Contributor

Before implementing its customer relationship management tool, flower and gift retailer FarEastFlora.com had many frustrated customers. They were unhappy because every time they made a delivery order, they had to repeat their addresses.

No customer information was electronically stored. "Everything was either in the mind or on a piece of paper that got lost in no time," says executive director Ryan Chioh.

Having done mail order sales since 1978, this small and medium-size business (SMB) got by with manual order taking and processing. Employees answered calls and wrote down mailing addresses. The company had no system to track repeat purchases, but instead relied on staff to recognize regular customers.

Getting to the point where they "were losing customers quite easily", the company decided to become more service-oriented by adopting a customer relationship management (CRM) tool, says Chioh.

Managing customer contacts
Live since Jan. 21, 2002, FarEastFlora.com's CRM tool allows quick searches on electronic customer records.

"We have seen customers express pleasant surprise when we pull their record" just from handphone numbers, says Chioh.

Customer data is first entered by members who sign up online or by staff who key it in for first-time patrons. After this, purchases are electronically logged.

"This allows us to know who (customers) are, what they ordered in the past and for whom and to which addresses," he adds.

Leveraging on this historical information, a reminder service has been set up to encourage customers to repeat their orders for anniversaries and birthdays.

The tool also connects with an Integrated Voice Response (IVR) system that automatically records and processes orders when operators are not available. Other built-in capabilities include real-time order tracking, complaint handling, delivery tracking as well as delivery confirmation via SMS or e-mail.

Currently mail orders make up the bulk of FarEastFlora.com's business. Although it has a physical "garden super-mart", walk-in sales is small. Another growing area is e-commerce, which now accounts for more than 25 percent of its business.

Different channels
The CRM tool is tied to its online store in such a way "that orders flow straight into our CRM system", says Chioh.

According to him, response time to online orders is also shorter--down to as little as a minute, excluding delivery time.

"No data is compromised as online entry by customers is captured directly into the system. There are fewer mistakes committed on our part and that is good news for our customers," he adds.

According to Terence Chan, regional managing director of Siebel Systems East Asia, there is no difference between the tools available to an online retailer and a brick-and-mortar one. Whether retailers sell via the Web, phone, fax or over the counter, the core CRM capabilities are the same when it comes to storing and making sense of customer data.

Multi-channel support within CRM packages, however, is needed to cater to different information feeds such as those from field sales personnel, dealers, partner networks and contact centers.

For the retail industry, a contact center makes sense only for an SMB with a large telesales outfit. A smaller outlet can simply use a CRM solution to help manage multi-channel interactions, adds Chan.

Recent developments in low-cost CRM have also seen vendors pushing on-demand CRM packages. Not requiring full implementation, such hosted services seem affordable but they have hidden costs, according to Gartner analyst Dean McGhan.

According to McGhan, retail SMBs have been slow in implementing CRM. Many don't see the value of CRM, and those who do are going about it slowly.
These include on-going maintenance and costs arising from change management issues. Also, when seats are added to accommodate more calls, they cost more than licenses of on-premise tools.

Torn between increasing the number of seats and adopting on-premise tools, growing businesses wonder which is more cost-effective. And according to McGhan, nobody can really answer that question.

Satisfied adoption
Chioh says it is difficult to ascertain if he is totally satisfied with his CRM package. He believes that CRM is a long-term investment, but adds that the current CRM tool has "done its job well so far". The cost of implementing the tool was higher than initially expected, but the company hopes to recoup it in the longer term.

According to McGhan, retail SMBs have been slow in implementing CRM. Many don't see the value of CRM, and those who do are going about it slowly. However, the sector is now growing more quickly compared to the last few years, he adds.

The SMB market for CRM is maturing, but for adoption to ramp up in Asia, vendors need to demonstrate value at comfortable price points for SMBs. He believes "most vendors are struggling to deliver functionalities within that price point". At a time when price is the visible roadblock to implementation, there has been mainly market hype about sales force automation, low cost of entry and ownership. News of failed implementation have also kept people away.

CRM success also hinges on user adoption, says Chan. After implementation, some organizations simply do not follow through with getting users such as sales or customer service staff on the system.

Furthermore, SMBs "need to mature in their thinking" on CRM, says McGhan. CRM is not just a tool for contact management. It generates revenue by understanding the ins-and-outs of all customers culled from every interaction with them.

Initially, automated contact management will ease customer tracking. However, companies who want a deeper insight into customer behavior will need powerful analytics that analyse and segment customers based on their spending habits.

CRM or not, FarEastFlora.com's Chioh believes "there is no customer loyalty"--they stick with you if there is continued good service. While CRM as a tool does enable better service through automation, it is still up to retailers to meet customer expectations. When this is fulfilled, you will have lifetime customers, says Chioh.

Gregory Teo is a freelance journalist based in Singapore.

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