n CRM solutions are proliferating as the industry seeks ways to forge closer connections with customers and fine-tune the offer to their many and varied needs. Ed Bedington reports on the progress so far The idea of being hugged by your supermarket manager might be enough to put anyone off their groceries, but while a romantic candlelit dinner for the customer and staff might still be quite a way off, the concept of businesses becoming more and more intimate with their shoppers is not so far-fetched. Customer Relationship Management or CRM has become a hot topic as retailers are jumping on the bandwagon in the clamour to better understand their customers. But as with any explosion in interest, the waters have become muddy. IT companies are everywhere, offering the latest CRM solutions and the range and breadth of the variety out there is mind boggling, and could leave even the most switched on wondering quite simply ­ what the hell is CRM? But perhaps the attempts to describe it are also adding to the confusion as Roy Barker, database marketing director with creative agency IMP, says: "People are spending a lot of time trying to define it. It's almost like the how many angels can fit on a pinhead' discussion that dominated mediaeval times. Trying to pin it down gives it, perhaps, less clarity." There is a multitude of descriptions out there, but what CRM boils down to is managing relationships between a business and its customers, with a relationship being any point where a customer has contact with your business. In a supermarket alone, this presents a mind blowing number of areas and sectors which have potential for a CRM strategy, and you can also bet that someone out there is willing to offer you the product or solution' to fill that gap. However, why is having a strategy to improve your connections with the customer important? "We consider the customer as an asset," says Steve Billingham, head of CRM at Cap Gemini Ernst and Young. "And most businesses do not have a single person responsible for looking after a company's customer assets. We see a real need for a chief customer officer, but this can't just be layered on, it means a reorganisation of the company to make it more customer-centric." To help guide companies through the minefield of CRM, Billingham and his team have set up a showcase centre where they demonstrate what he describes as the art of the possible. Another motivation for improving customer relations is the increasing need for businesses to hang on to existing customers. With modern channels and increased competition, the choice for the consumer has never been greater. Catherine Harding, director of retail solutions for software provider Blue Martini, says: "CRM can help with that and also help grow the amount of business each customer does with you." Billingham echoes this: "The battle for the customer is hotting up and CRM is, in large part, a response to that." It is important to remember that the solution to this battle is not only a question of having the right gadgets and technologies in place. Graeme Munro, chief executive of CRM expert Ciberion, says: "Many go wrong by thinking purely in terms of CRM products. It's not about products, but an approach to business and how you treat customers. No piece of software is going to do that alone." But technology does have an important role to play, because it's been one of the biggest drivers in the sudden interest in the issue. "The technology is available to allow people to do the kind of things they want to," says Billingham. And the technology does not always have to be massively hi-tech to be considered a CRM device. Asda is one company that uses both technology and simple common sense approaches to improving its relations with customers. Head of customer services Richard Woodhall says: "My definition of CRM is quite simple, we should listen to what our customers are telling us through every available channel that we have." The company uses a variety of methods to do this, from call centre technology through to customers filling out simple forms in store. "We were the first retailer to introduce the concept of greeters," Woodhall points out. "We now have specialist space hosts, who are there to help disabled people or young mothers with children and assist them getting in and out of the store easily." The company is also trialling a special instore phone line, the general store manager line or GSM. Woodhall says: "If consumers are unhappy with the service they've had they can pick up the instore phone and it goes straight through to the mobile of the store manager who can then deal with the issue. That's going down well in the 10 stores we are trialling it in, and we plan to roll it out throughout the rest of the chain this year." However, most of Asda's work revolves around improving customer service, yet that is just one facet of CRM, says Blue Martini's Harding. "It's not just about great service to all consumers, it's about optimising revenue and profit, and understanding which consumers drive that revenue and profit the most." Or as IMP's Barker says: "What's the point of being extra nice to a customer if you're not going to get anything more out of them?" Harding points out that having effective systems in place means retailers are able to tell which customers are most profitable, allowing them to either reward their most profitable shoppers or encourage others to spend more with them. Two retailers that are using CRM techniques to gather relevant customer information and then apply it to improve their businesses are Tesco and the Co-operative Group. Tesco uses the information gathered from its Clubcard users to tailor its offers to individual groups of customers, with more than 300,000 quarterly mail-outs. CGY's Billingham says the company is a good example of using the information for targeting promotions. "There needs to be an emphasis on converting that information into data that gives insight into the customer so the offer can be tailored and targeted at those who are interested." Harding says wise use of the data can also help drive growth by tempting customers into new sectors: "You can offer a 30% off deal to get people to try the deli, but at the same time you don't want to be offering that to people who already shop the deli." IMP's Barker says the idea of Big Brother is no longer an issue and the gathering of information is something customers now accept and almost expect. "They know they are giving information on themselves in return for better service and offers." Nigel Walter, head of marketing development at the Co-operative Group, says: "Our biggest CRM tool is our Dividend card. It allows us to see what individual customers are buying and allows us to identify which products substantially increase their basket spend." The information gathered by the society's Dividend card gives it insight which it can then use to try to expand its share of the grocery basket. "Due to the top-up nature of our business we have a relatively small part of the grocery purse, but that means simply increasing people's baskets by 50p or £1 makes a big difference." The company is also in the process of altering its Dividend card offer from just 5% dividend on own label products to 3% on own label and 1% on branded across its entire estate. Walter says the move is popular with customers and will give a clearer view across every product and the whole of the business. "CRM is basically down to understanding your customers and making sure your promotions remain relevant to them. You have to live and breathe your customers." But of course it's not only the retailers who can benefit from employing CRM solutions. Manufacturers can benefit from the techniques both in the B2B sector ­ understanding a retail customers' needs and acting upon them ­ and also in the B2C sector as well. Dadi Akhavan, president of CRM provider E-centives, says: "Manufacturers have traditionally not had a direct relationship with their end-users. Those relationships have been held by middlemen such as retailers.Having a direct relationship with their consumers, knowing exactly what they want, and linking that information to what they actually purchase is extremely important for manufacturers." Akhavan says manufacturers can work separately from the retailers and use CRM techniques and systems to increase their customers' brand loyalty. However, whatever your company or sector, people need to be realistic when it comes to implementing CRM systems. "The days of simply saying, well it's a good idea and everyone else is doing it' are over. You need to put together a solid business case about what you want to achieve so it delivers solid benefits," says CGY's Billingham. IMP's Barker adds that, ideally, companies should take implementing a solution a stage at a time: "People tend to go for the end game too quickly. People want to get the fully integrated system. A lot of these big systems fail because they take so long to deliver that they're out of date by the time they're up and running." There's little doubt that CRM is an important part of today's business climate as Asda's Woodhall warns: "In the future, price proposition will narrow and customer service will be key." However although many people consider CRM to be about giving big companies the advantage of the old corner shop, where the owner knew all his customers by name, Barker has a warning: "I've always had a problem with the corner shop analogy because it was the consumer who turned away from them in favour of the superstore. So is there any point in going back to some golden age if that's not what the customer wants?" n {{COVER FEATURE }}