The global retail industry is on a high growth trajectory, expected to reach nearly $33 trillion in sales by 2025 according to Statista. [1] With rapidly evolving consumer preferences and mounting competitive intensity, retailers need to deliver seamless omnichannel experiences to attract and retain customers. This imperative is driving widespread adoption of customer relationship management (CRM) technology.
The Pivotal Role of CRM in Retail
CRM helps retailers in multiple aspects – creating unified customer profiles for personalized engagements across touchpoints, sales forecasting leveraging purchase history, targeted promotions aligned buying behavior, real-time visibility into inventory, and consistent customer service.
According to McKinsey, AI-powered retail CRM solutions can automate up to 40% of workflows including campaign management, contact center operations, order processing and more. [2] Their research shows over 75% of retailers have seen measurable uplifts in operational efficiency, revenue growth and cost savings from investments in this space.
Gartner predicts that by 2023, 75% of all retailers will deploy intelligent CRM applications to further accelerate data-driven transformation. [3]
In fact, the retail sector constitutes the largest adopter running over 25% of total CRM spending across industries according to Grandview Research. [4]
Key Factors Driving Retail CRM Adoption
- Creating 360-degree customer views from data siloes
- Personalization at scale
- Optimizing promotion planning and execution
- Inventory and order management
- Sales forecasting and targeted prospecting
- Omnichannel customer service
- Marketing campaign orchestration
However, the market has no shortage of products catering to retail CRM. Selecting the right solution that aligns to strategic business priorities is crucial yet challenging.
Through this comprehensive guide, we simplify the evaluation process by:
- Highlighting must-have capabilities in a retail CRM system
- Discussing tangible benefits delivered by CRM technology
- Providing an unbiased decision framework for comparing vendors
Let‘s get started.
8 Key Capabilities of Retail CRM Software
Here are the pivotal functional areas that should be top-of-mind while evaluating retail CRM options:
We explore these in further detail below:
1. Unified Customer Profiles
This creates the coveted single source of truth on customers and prospects by connecting data from diverse channels like web, mobile apps, in-store purchases, contact center interactions, email campaigns and more.
Key inputs assimilated into persistent records include:
- Demographics: age, location, life stage milestones
- Transactions: order history with item-level details
- Interactions: call transcripts, email content, support tickets
- Marketing: campaign membership, promo response
- Service: cases, product issues, returns/exchange logs
Such 360-degree customer views allow hyper-personalization of experiences while optimizing customer lifetime value.
💡 American Eagle Outfitters attributed a 10% increase in email click-through rates to 1:1 targeted campaigns powered by CRM data.
2. Campaign Management
Sophisticated orchestration mechanisms for:
Segmentation: Create nuanced audience groups aligned to value – high/medium/low lifetime value segments, demographic clusters, order size tiers etc.
Workflow Design: Map sequential cross-channel nurture paths leveraging email, web/mobile ads, coupons, catalogues tailored to granular retail personae.
Deployment: Schedule optimized engagement cadence across two or more orchestrated channels selected based on historical conversions.
Optimization: Continually refine channel mix, segment priority and promotion timing based on campaign performance – open rates, clicks, attributable sales.
3. Loyalty and Referral Programs
Table stakes in retail CRM:
- Multi-tier loyalty structures with progressive discounts, free shipping and early access to motivate increase in share-of-wallet
- Activity tracking to earn points – for social shares, reviews, community participation
- Refer-a-friend mechanisms for exclusive rewards
- Birthday messages and seasonal offers for VIP patrons
Such initiatives engender brand love and incentivize high-value actions like UGC, referrals, and retention ultimately enhancing customer LTV.
4. Omnichannel Customer Service
- Unified agent desktop providing customer transaction history across web, mobile, phone, store
- Routing to appropriate teams based on user intent, query urgency/complexity, language
- Live chat with screen sharing for personalized shopping guidance
- Return/exchange workflows from initial ticket creation to shipment tracking and refund processing
Table stakes to deliver support matching digital-first behavior with context-aware assistance across channels.
5. Contact Center Technologies
Essential capabilities:
- IVR self-service handling common pre- and post-sales queries to deflect ~40% calls [6]
- CTI and screen pops for customer data during inbound/outbound interactions
- Workforce management to dynamically optimize schedules, shrink no-shows, manage adherence
- Quality evaluation against KPIs like resolution times, CSAT for coaching
Right-size costs while ensuring optimal service quality through automation, notifications, and oversight.
6. Order/Inventory Orchestration
Must-haves:
- Order capture across channels via POS, ecommerce, mobile, phone, in-person
- Visibility into stock levels segmented by location, allocation to pending purchases
- Fulfilment methods – ship from store, curbside pickup selected based on proximity
- IoT integrations with sensors tracking shelf inventory in real-time
Enable buy anywhere, fulfill anywhere capabilities aligned to locale-based customer preferences.
Lowe‘s aligned inventory systems across 137 stores with digital properties using Oracle Retail resulting in a 25% increase in omnichannel revenue.
7. Store Operations Management
Elevate in-store experience through:
- Associate enablement via customer-driven alerts for personalized services
- In-store promotions customized to micro-segments like high-spenders on certain categories
- Smart checkout with mobile POS integration for faster billing
Boost convenience and satisfaction while optimizing layout, placement and workforce allocation decisions.
8. Analytics and Business Intelligence
- KPI tracking for customer service, campaigns, channel contribution
- Cohort analysis for projecting customer lifetime value
- Campaign analytics reporting multitouch attribution
- Abandonment metrics across browsing stages to cart
Continuous insights into performance by multiple cuts allows refinement of processes, systems and engagement strategies.
6 Key Benefits of CRM for Retailers
Deploying industry-specialized CRM at scale generates multifaceted returns spanning customer experience, operational efficiency and revenue growth levers.
Let‘s expand on the major upsides:
1. Increased Share of Wallet
Analysis of retail customer journeys reveal tendency for omnichannel patrons to spend more compared to single channel ones.
CRM orchestrates consistent engagements driving higher mindshare motivating cross-selling and upselling. This expands share of spending allocated to retailer over time.
2. Higher Customer Lifetime Value
Unified records of every interaction across marketing, sales and service channels provides holistic visibility. Predictive intelligence can detect signals indicative of reduced spend or defection risk early.
Proactive campaigns like win-back offers aim to re-engage such high risk segments to maximize retention which directly drives up customer LTV.
Domino‘s attributes over 50% YoY increase in online revenue per customer to targeted CRM initiatives.
3. Improved Marketing ROI
Granular visibility into response rates to campaigns constructed for micro-segments allows for rapid testing and continual optimization to maximize impact.
Analyzing multi-touch attribution provides accurate channel mix modeling for optimizing program ROI across search, social, email, addressing critical CMO priorities.
4. Higher Loyalty and Advocacy
CRM underpins agility in delivering personalized experiences across the entire consumer journey. Relevance and emotional resonance drives satisfaction forging lasting connections.
Initiatives like birthday messages or early access to sales for valued customers enhances retention. Compelling referral programs foster organic advocacy.
5. Greater Team Productivity
Agents are empowered with complete context minimizing repeats and accelerating query closure. Intelligence-driven suggestions facilitate upsells improving customer as well as commercial outcomes.
Workflow automation reduces overhead for mundane tasks allowing refocus on critical revenue driving functions.
Overall organizational energy is centered on high-impact decisions vs. reactive issue resolution.
Emerging Technologies Expanding Retail CRM Value
While current CRM capabilities drive significant operational and strategic upside, integration with leading edge innovations unlocks additional business impact:
Conversational User Interfaces
Chatbots and voice assistants allow delivering hyper-personalized recommendations balancing individualization with scale while lowering costs of simple query servicing.
Computer Vision
In-store cameras tracking shopper demographics, dwell times, expressions etc coupled with item-level inventory data allows optimizing planogram, promotions, and associate interventions leveraging analysis of correlations with outcomes like conversions.
Blockchain Loyalty Programs
Distributed ledger technology ensures transparency in accrual and redemption of reward points enhancing program integrity and user trust. Cryptographic tokenization also enables embedding loyalty benefits into NFTs owned by customers.
Frictionless Retail
Sensor fusion connecting CRM with billions of touchpoints across shelves, doors, cameras etc allows refinement of layouts and targeted in-store interventions apart from enabling checkout-free experiences.
We next present a structured framework for retailer executives to identify and deploy the CRM platform aligned to their strategic transformation roadmap while considering critical elements of total cost, integrations needs and scalability planning.
How to Select The Right Retail CRM
Here are key considerations when launching this critical initiative:
1. Map Strategic Business Priorities
Rank decision drivers – is loyalty or personalized service more important? Inventory accuracy or global brand experience? Channel contribution insights?
This provides clarity on must-have use cases and capabilities.
Top Retail CRM Investment Priorities
- Increase share-of-wallet
- Improve inventory turns
- Reduce customer churn
- Increase associate productivity
Aligning solutions to pain points ensures maximum RoI.
2. Audit Existing Infrastructure
Take stock of current ways of working assessing ease of connections with:
- Ecommerce platform – Magento, Shopify, custom
- Marketing automation tools – Eloqua, HubSpot, Adobe
- Contact center solution – Genesys, Nice inContact
- POS and inventory management systems
APIs and prebuilt integrations minimize glitches during rollout.
3. Calculate Total Cost of Ownership
While baseline subscription fees dominate budgets, organizations need visibility into:
- Professional service costs – deployment, customization, data migration
- Training and change management
- Ongoing support and operations
Project TCO based on business footprint – stores, warehouses, global markets etc.
4. Verify Retail CX Expertise
Evaluating alternatives, seek evidence of:
- Retail data model encompassing customer, order, merchandising schema
- Preconfigured workflows for store fulfillment, IoT powered stock visibility
- Industry benchmarks addressing KPIs like CSAT, NPS, churn rate
Such expertise radically accelerates time-to-value.
5. Review Technology Vision
Given incessant industry disruption, the solution should demonstrate commitment to:
- Ingesting new data sources – footfall analytics, voice assistants
- Harnessing AI/ML for next-best actions and hyper-personalization
- Supporting conversational interfaces and social/interactive commerce
- Connecting sensors and IoT
This rings-fences against premature obsolescence as consumer preferences and paths-to-purchase evolve.
Evaluating Leading Retail CRM Solutions
While the marketplace offers diverse options for managing customer data and interactions, below six emerge as leaders based on market share, capabilities, and proven success guiding retail CX transformation [7]:
1. Salesforce Commerce Cloud: Comprehensive CRM tightly integrated with order management, POS, inventory, fulfillment for end-to-end orchestration.
2. Oracle CX for Retail: Modular apps for loyalty, marketing, service connecting demand signals to supply chain.
3. SAP Customer Data Platform: Consolidates data siloes into unified profiles actionable enterprise-wide.
4. Adobe Real-Time CDP: Unified customer records fueling analytics-led, validated marketing across channels.
5. Microsoft Dynamics 365: Connected workflows harnessing Microsoft technology stack advantages.
6. HubSpot: Highly intuitive, flexible and affordable SaaS platform for mid-market retailers.
Each has relative pros and cons based on variables discussed previously – TCO, ecosystem leverage potential, scalability and implementation complexity which can serve as potential tie-breakers.
Aligning solution attributes to business vision and maturity allows finding the optimal fit to address user needs today while keeping pace with industry change.
Appendix
References
- Statista – Global Retail Industry Sales
- McKinsey – The potential for artificial intelligence in retail
- Gartner – AI Business Value Forecast
- Grandview Research – CRM Industry Report
- Forrester – Retail Customer Experience Top Trends 2023
- ContactBabel – The future of self-service customer experience report
- SelectHub Comparison – Retail CRM Software
More Resources
