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Why is Customer Relationship Management (CMR) in Retail important?

What is CRM in retail?

Customer Relationship Management (CRM) in retail isn’t a new concept, but it’s one that could help retailers win the battle for sales in these competitive times. Tesco introduced their loyalty Clubcard in 1995, collecting data on shoppers and using the information to personalise discounts and rewards. Fast forward 21 years and the majority of retailers offer some kind of reward or loyalty program with Marks & Spencer being the latest to launch their Sparks card, a new ‘Members Club’ which includes bespoke offers and priority access to sales for those that sign up.

What is the importance of CRM in Retail?

Customer Relationship Management allows retail businesses to better understand their customer base; who they are, what they like and how they interact with you. CRM systems allow you to build up a large reserve of information about your customers, from their demographic groupings to the forms of purchase they prefer. CRM plays a highly significant role in guiding business decisions and strategies, including methods for securing repeat purchases and customer retention, and more targeted and effective marketing. 

The CRM process in retailing

For retail businesses, a customer relationship management system supports sales and performance throughout every step of the customer lifecycle.

1. Awareness

The awareness phase of the customer lifecycle is where the customer learns about your business. CRM allows you to keep track of how your customers discover you and collect information about who they are. This allows you to tailor promotional efforts to different demographics and target particular customer groups with awareness raising materials. 

2. Consideration

When a potential customer begins to engage with your business, they enter the consideration phase of the customer life cycle. In a retail context might be when they go from looking at a window display to entering the shop to look at your products. At this stage, CRM allows you to keep track of what is appealing to customers and drawing them in, and which groups of customers you still need to work on reaching out to. 

3. Purchase/Conversion

When a customer converts by making a purchase, they have chosen to spend their money with your business. From a CRM standpoint, this is a brilliant opportunity to collect information about your customers and to maximise the size of the purchases they make. This can include remarketing products to the customer at checkout, providing options for add-on purchases, and encouraging customers to sign up for newsletters, communications and loyalty offers and schemes. The steps taken at this stage of the process can set you up for future success.

4. Retention

The retention stage is all about getting customers to come back and make repeat purchases over an extended period of time, building up loyalty. Customer relationship management matters at the retention stage because of the knowledge you have about your customers’ previous purchases, which allow you to offer them similar or complementary products.

5. Advocacy

Advocacy is the stage of the customer lifecycle beyond loyalty, where a customer feels connected to your brand to the extent that they feel motivated to spread the word, and recommend your products or services to their friends, family and other contacts. 

An effective CRM system allows you to add much greater momentum to this stage of the customer journey because you can use your understanding of and relationships with your customers in order to enable and encourage them to advocate for your business. For example, you can show them targeted advertisements offering a discount in exchange for referring a friend, or create opportunities for them to share information about your brands, either in everyday life or on social media.

Benefits of CRM in Retail

A retailer’s relationship with their customer is key to repeat store visits, brand loyalty and ultimately sales conversions.

But how do you go about creating a winning formula? How can you engage consumers in today’s multi-channel environment, be it through a website, social media channels or in store, to keep them coming back?

How to improve your customer relationship management

It’s no longer enough to have a bricks and mortar store and hope that people will visit and spend their hard earned cash on impulse buys. Customers need to be enticed in to the store, given a reason to visit and a reason to stay and shop. Retailers need to create a welcoming environment as well as an experience for their customers.

Having an accurate retail CRM database that is focused on the customer is an integral part of the jigsaw for any retailer. Consumers are savvy, demanding and often in a hurry, so a successful retail CRM system will pay dividends when it comes to building loyal customers. Retailers need to think smarter to engage shoppers and create loyalty towards their brand, and to do this they need to collect lots of information about customers and their behaviour.

Birthdays? Send a voucher offering a discount once a year. Not seen a customer for a while? Send an email with the latest news and products available. Regular customers? Invite them to an exclusive event.

Retail customer relationship management


How to develop retail CRM


A good retail CRM system can help build loyalty, creating brand ambassadors who will happily spread the word about their positive customer experience. Get it wrong and they’ll be even more vocal about a bad customer experience.

There are several ways to collect information to build a successful CRM database. Many retailers ask for an email address when you purchase in-store, others offer the latest news and discounts by signing up to their newsletter online or by developing customer chat rooms and communities. Whatever the means of data capture, if the right questions are asked, retail marketing campaigns can be targeted to the individual, not just personalised but also targeted to the right gender, location and even specific products of interest.

Using a database to personalise products, discounts and events for consumers is crucial to creating repeat customers who are keen to engage with a brand and shout about the benefits of signing up.

And it’s not just stores that offer personal, targeted marketing and customer relationship management. The leisure industry offers a host of benefits when you stay loyal to their brand, think Avios miles, Hilton Honours rewards, credit card points and even Starbucks rewards cards – they all want repeat customers who they know better, and they’re willing to go the extra mile to get them.

To find out more about the importance of customer relationship management, as well as improving customer relations and footfall, please visit our queue management and customer experience pages.