Retail Sector Searching For CRM Answers

CRMA (Customer Relationship Management Association) Canada recently hosted the first in a series of privately held roundtables investigating the status of CRM in Canadian organizations. Held in Toronto, the roundtable brought together spokespersons from several of the country’s leading retailers to discuss CRM issues faced by the retail sector.

The most frequently raised concern throughout the discussion had to do with the “difficulty in integrating the company around the customer”, both from a cultural and a technology infrastructure perspective.

“It appears that integration, whether it be people, process or technology oriented, is right now unachievable,” concluded CRMA Canada in a follow-up report entitled The Educated Approach To Enterprise CRM Opportunities, Research & Roundtable Study Overview Report – Spring 2002. The report included findings from a research study intended to benchmark the current CRM situation in Canadian companies, tracking and evaluating what is working and what is not working.

The report states that the CRM issue ranking second in importance to integration is the requirement for “Organizational Change”. Respondents recognized that companies needed to shift their organization, most frequently beginning with the most senior managers, before they would be able to integrate people and programs around a customer-centric framework.

The degree and sophistication in managing customer value varied widely within the roundtable group. However, there was consensus that delivery of customer value management is required to practice CRM, and, more importantly, to justify CRM program expenditures with senior management.

At one end of the spectrum, one retailer relied on a sophisticated customer valuation matrix. Another was implementing a point-of-sale system intended to capture and deliver customer value data.

It was observed that there is no one method being used by retailers to valuate customers and establish ROI. One company uses activity-based costing. Some are working to define lifetime value, focusing efforts on those with a high LTV. The majority, however, are concentrating on marketing programs and program rates of response, rather than defining and tracking customer value to maintain and grow the most profitable customers.

“A common theme emerging from the research is that every leading retail organization in Canada has a different definition of CRM, one which doesn’t yet involve practicing the Enterprise Performance planning view,” said Laura Pollard, President, CRMA Canada.

Key Research Findings

While the research study did not probe participants for specific CRM corporate spending-level data, key findings indicate that organizations consider CRM initiatives to be a major competitive factor in the sustained growth of their business. Where funding for CRM initiatives had not been allocated in early-stage companies, there was intent to ensure senior management support was secured for CRM budgets.

When asked if CRM is “just a fad”, respondents actively undertaking programs indicated that CRM is an important strategic initiative that has been taken seriously for years, and it is one not about to “go away in the future”. It was stated that CRM “has come along way but has a long way to evolve”.

Both the written questionnaires from the research study and the roundtable discussions indicated the need for more skills development in undertaking CRM. It appears that no formal internal skills development programs are being delivered to the management or staff in companies attempting CRM – not even to those attempting the difficult to achieve integration around the customer.

When asked about the use of outside consultants who would provide enterprise CRM skills, not one company stated they had retained one, although some had retained retail consultants and direct-marketing consultants.

A surprising output of the roundtable discussion was the fact that client organizations feel vendors are not partnering in the accountability for risk in CRM initiatives. “It is clear that retailers see vendors having a strong need… to sell CRM software, services, et al,” the report states. “However, they do not appear to have distinct and useful offerings. In addition, retailers voiced the concern that vendors are not working in partnership with retailers, sharing in the associated risks and successes of undertaking CRM.”

For further information, visit the CRMA Canada Web site at