Customer Relationship Management Approaches Used by Coles Supermarket - Example

CRM approaches used by Coles Supermarket Student’s Name Course Professor Date Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Purpose of report 3 3.0 Company Overview 3 4.0 Recent customer relationship initiatives 4 5.0 CRM Theory 6 5.1 Analysis and models 8 6.0 Ethical and sustainability issues 10 7.0 Recommendations 11 7.0 Conclusion 12 References 13 1.0 Introduction Verhoef (2003) defines Customer Relationship Management [CRM] as a holistic approach to sales, marketing and customer service which applies methodologies and software systems for a company to build relationships with its customers. The advancement in technology has led to organization, automation and synchronization of CRM. This report will look at how Coles Supermarket uses CRM to tie together the lifecycle of its customers and distribute it across its teams and business functions. 2.0 Purpose of report The report begins by evaluating Coles Supermarket by highlighting its core functions and current focus on customer relationship. It proceeds to comparison of Coles Supermarket’s CRM initiatives with the ideals of customer relationship theory and models as well with other competitors in retail market. The analysis will then help to develop critical recommendations for Coles and progress to better CRM. Structure of the report. 3.0 Company Overview Currently, Coles Supermarket operates 762 stores in all Australia states with over 100,000 employees. The retail store was established over a hundred years ago and has a significant market share in Australia. Woolworths is its major competitor and together both companies take 80% of the market. According to Condon (2012), Coles’ five-year customer relationship roadmap is meant for the company to compete with Woolworths in Australia’s retail rank. The role is mandated to a vibrant senior manager, Jackie Healing who came from UK retailing ranks. Her leadership is central to establish core brand standards, differentiate programs and work with Coles corporate ranks. Since 2006, Coles has worked towards developing an ultimate experience for customers from making choice of what to buy and building trust. Appropriate leadership will in turn promote Coles’ objectives of increasing sales productivity, pipeline, sales win rate, revenue and forecast accuracy. 4.0 Recent customer relationship initiatives Coles’ initiatives have been to try to deliver in the area of quality through some core mechanisms put in place to track quality and monitor it closely. The first initiative focus on customer complaints measured per million units that are sold at a given time. Coles has a sophisticated IT system for tracking complaints and necessary early warnings systems that allows them to respond when necessary (Condon 2012). In 2013, Coles chose Oracle to help it track purchasing trends and deal with customer services. The Oracle system promotes efficient reporting and real-time decisions as well as real time recommendations and interaction for customer. Coles’ integrated the system as way to meet service-level agreements. The system help it access and store data in its 2,000 stores. Enterprise Manager 12C and Exadata Database Machine help Coles to improve its database query performance for more than five times. The system was implemented for 12 weeks under the supervision of Coles’ database manager (Lee 2013). The system implemented The second initiative focus on product inspection immediately after arrival at the distribution centre, thirdly, use of data to inform its suppliers of outcomes and customer experiences and fourthly, an extreme initiative to recall food products which include alerts to customer through social media when recalls occurs. (Condon (2012) argues that handling customer complaints through the use of sophisticated IT system has allowed Coles to achieve huge improvement in the past years. The system helps to identify and group complaints across its 40,000 food items. The current initiatives focus on continued improvement as the statistics shows that improvement has stabilized. Coles is working towards reducing the number of complaints to below 10 from the current figure which stands at 17 per million units sold. Having such a system in place, it is possible to identify the unacceptable complaints for various food items. Coles acknowledge the conditions that may affect products when on transit despite leaving the factory in good form. In turn, it has established a tight inspection system in all its distribution centers. Inspection is a proactive mechanism to prevent placing items on the shelves which in turn increase complaints and dissatisfaction. Over 100 technical specialists, meat scientists, packaging specialists, food technologists and agronomists employed in Coles ensure good inspection. The specialists understand the food chain and processes at manufacturing sites which in turn improve the supply base (Condon 2012). Wang & Feng (2012) argues that, it is important to protect a whole range of products that are marketed under a company’s banner. The specialists will respond by ensuring that at no given time will customers at Coles get a product wrong as it can affect the whole brand proposition. For example, is a customer has a problem with tuna, they would walk away from beef. Coles has a set system that uses data to inform its suppliers of bad and good outcomes. In turn, it ensures that the data will inform the suppliers to be active problem solvers and expect changes and reduce rejections in their stores. The system goes all the way to the farmers and growers and influence the way animals are fed, raised, herbicides and pesticides used in order to improve quality and communicate it to the customers. Ultimately, that will ensure that suppliers comply with the set standards. Once the consumers are assured of quality products, they will develop an emotional attachment to the supermarket and make it their brand choice. According to Ahsan & Rahman (2013), trust is critical to building consumer trust and if retailer fails to deliver safe product, trust may be destroyed overnight. Condon (2012) observes that, recently, Coles came up with an extreme initiative to recall food products. Last year, it had four recalls where it alerted the customers who had bought its products through social media. Coles has removed the slow stalls of pork production and moved away from caged eggs. Though recalls is a reactive initiative that can erode the customer trust and relationship, it can go a long way in promoting confidence to most customers that Coles cares. The move is part if assuring customers to trust its brand and prove their proposition to deliver quality, value and develop trust. 5.0 CRM Theory As Farooqi & Raza (2012) argues, customer life cycle is a critical matrix that can help any company to understand the distinct steps to take to develop the best customer relationship. The theory represents a fact that customer retention is always a lifecycle which is the core goals of effective CRM for customer to move through the cycle again and again. The cycle begins with business activities or practices that get potential customers’ attention, teaching them what the business have to offer, turn them into paying customers and them keep them loyal so as to act as ambassadors to business’ products by urging other customers to join in the cycle. Hassan (2012) claims highlights the possible value disciplines that a company can choose including product leadership, operational excellence and customer intimacy. Coles happen to be in the forefront with the first value choices. Its products goes through a rigorous inspection system while the laid down IT systems, workforce and communication with suppliers ensure excellence in its operation. However, there are no clear initiatives focusing on customer intimacy. Intimacy is the higher level outcome in customer relationship and as He (2012) argues, by understanding the needs of the customer and allowing them to evaluate the gaps; a company can deliver customer expectations, services and add value to its products. Hassan 2012) argues that cognitive bias is common in most companies that assume that there are no problems because they have some processes in place and that the workforce is already aware of those processes. However, when the customer who is the focus of the strategy is involved in evaluating the gaps through surveys and feedbacks, CRM can develop to maturity model and help organization to plan and master their processes. Understanding customer lifecycle strengthens customer relationship by establishing trust and reliance with customers, provision of better services and portfolio management (Farooqi & Raza 2012). To leverage the benefits, people, processes and technology are cornerstone for a successful CRM strategy. If the company fails to give the necessary attention to each of the mentioned pillars, it can lead to failure in customer relationship. CRM attempts to serve certain objectives. In some cases, it can be an attempt to reduce costs. For instance, Coles’ use a system that store and organize information which is then used for making the necessary decisions and warn various departments and suppliers of problems. In other cases, CRM may be an attempt to increase revenue and build customer loyalty. Through the initiatives, a company can identify new opportunities, for instance the Coles’ removal of sow stalls from its pork production and avoiding caged eggs (Condon 2012). The initiatives reduce missed opportunities as the company’s workforce can work in time to offer the necessary products as required in the market. Through the leadership of Healing, Coles has established its brand standards, safety health, farming and environment welfare. Ultimately, these initiatives reduce customer defection, improve customer service and enhance appearance of the company. 5.1 Analysis and models Tavana, Saeed Fili, Vaghari & Kakouie (2013) argues that collaborative CRM is a model build on effectiveness of multiple units such as sales, technical support and marketing. These units share any information and responses from customer interactions. The approach purposes to improve quality and increase the levels of customer service leading to customer satisfaction and loyalty. A collaborative CRM is more manifest through Coles’ initiatives. A simple CRM strategy or model as highlighted by Hall-Stigerts (2014) involve five distinct stages which offer a framework for evaluating where a company’s CRM practices are and progress. CRM may be non-existent meaning that no management processes apply some coordinated practices to produce some desired outcomes. However, to begin, stage 1 would involve an initial or Ad Hoc without format management processes where a few managers apply the practice in an informal manner to produce some outcomes. Stage 2 involves a repeatable but intuitive process without format management processes but ideas that are informally applied towards desired outcomes. Stage 3 involves a defined process where management deploys processes even though without company-wide standards. Stage 4 involves a managed and measurable CRM where standard practices, execution and monitoring exist for specific outcomes that affect the business. Coles’ initiatives can be grouped under Stage 4. The final stage has optimized processes where the management applies the practices central to the company and ensure continuous improvement. Some of the initiatives in Coles such as customer complaints warning systems reflect the optimized stage of CRM. Tavana, Saeed Fili, Vaghari & Kakouie (2013) further observes that, operational CRM is an approach where customer communication from marketing, sales and after sales services and feedback are invested in a person for service engineers and sellers to access the history of each of their customers. The approach promotes interaction with customers where they can access relevant information and the right time and offer products within wide-range of interaction channels. The approach is swift as respective personnel can access information and offer immediate feedback to the customers or direct the issues to the necessary authorities. The model is also manifest in Coles CRM where there is defined leadership where standards are developed and implemented by various specialists. It is also observable that the customers connect with Coles through various channels such as social media sites and through a complaint system developed by the supermarket. However, it is not clear whether the other personnel working in the supermarket participate in CRM processes. There is no information showing the steps that those who interact directly with the customers at the shelves and cashier point. 6.0 Ethical and sustainability issues Ethical souring is one of the significant ethical undertakings in Coles. The supermarket purchases goods and services free from exploitation in their manufacturing process and those that does not endanger health, safety and environment. However, Australian Ethical Investment Ltd has highlighted the challenges they find when balancing between the positive and negative dimensions they use in assessing the ethical compliance in both Coles and Woolworths. Though they have high sales margins and various investment metrics Wesfarmers which own Coles is also involved in coal mines while its competitor owns poker machines and pubs, activities that are unethical under its ethical charter. Other practices highlighted as unethical in Coles and its competitor Woolworths is troubling relationships with its suppliers. Having the highest market share, both the supermarkets exercise unprecedented power due to their size which is at time abused by imposing uneconomic prices and growing unfair terms with manufacturers and farmers who stock in their shelves (Australian Ethical Investment Ltd 2015). Australian Consumer watchdog carried an action last year where Coles admitted that it demanded payments from its suppliers. The act is unethical as it bullies the suppliers and pressures them and end up harming them. Similar claims of Woolworths pressuring suppliers to make up the profit lost through discounting harm suppliers and still make it hard for the survival of independent and smaller supermarket operators (Keith 2012). Australian Ethical Investment Ltd has also remained adamant for its choice not to invest with Coles as it is unclear how they look after their staff through payment that may fall below the award rates and higher levels of contract and casual labor. Other collateral damage is caused due to reliance on factory farming and intensive practices which are environmentally unsustainable. The hard, slippery and soft selling may hurt consumers mostly for some items that may be consumed excessively (Australian Ethical Investment Ltd 2015). 7.0 Recommendations Coles’ investment and practices majorly focus on competing with Woolworths, minimally in CRM and poorly in ethical operation or practices. In turn, Coles need to figure out some of the following: Coles IT system has promoted necessary customer data analytics to promote better customer service, marketing and sales. However, with so much data, Coles may struggle when making sense of feedback and information from the customers and the public. In turn, to evaluate and respond on time to consumer information, Coles need to come up with a structure in all levels of its service to make review easier, real time and proactive. Though the highest leadership is well demonstrated, the processes developed may fail to be implemented if there is no coalition of teams which understands their importance (Osarenkhoe & Komunda 2013). Although Coles ethical sourcing is outstanding, it is doing poorly in various other areas that need to improve. Some of these areas are necessary to promote its ethical performance: Ensure more restrictions to product line which earns it most revenue by providing more shelf space for organic, sustainably farmed and produce that are fairly traded, Coles need to manage its supply chain better without focusing on competing with Woolworths. In turn, it can deliver fair treatment of its suppliers; reduce negative environmental, social and animal impacts, It ought to come up with short-term and long-term plans to minimize environment footprint regardless of how its competitor, Woolworths does. (Mailander 2012) 7.0 Conclusion Coles has five-year roadmap that helps it in re-asserting its seriousness as a competitor to Woolworths in retail ranks. It focus has been to set standards and ensure environment, farming and safety health welfare. The supermarket collaborates with its customers to ensure that they trust it and make the best choices before, during and after purchase. Its IT System implemented by Oracle help it measure customer complaints and solve them on time. Coles’ biggest challenge is ethical investing as its effort is more lacking when trying to balance between its negative and positive aspects in its operations. References Ahsan, K, & Rahman, S 2013, Management of product returns in retail firms: an investigation into retail returns policies and service determinants In 27th Australia and New Zealand Academy of Management ANZAM Conferencepp 1-14 Australia and New Zealand Academy of Management. Australian Ethical Investment Ltd, 2015, Why we don’t invest in Coles or Woolworths Australian Ethical Accessed 22 September 2015 from https://wwwaustralianethicalcomau/news/why-we-dont-invest-coles-or-woolworths/. Condon, J, 2012, August 16, Supplier, customer relationship key to Coles’ retail strategy Beef Central Accessed 22 September 2015 from http://wwwbeefcentralcom/trade/supplier-customer-relationships-key-to-coles-retail-strategy/. Farooqi, M, & Raza, K 2012, A Comprehensive Study of CRM through Data Mining Techniques arXiv preprint arXiv:12051126. Hall-Stigerts, L, 2014, December 18, What is CRM - A Holistic Approach to Customer Relationship Management, Sales Force, Accessed 22 September 2015 from wwwsalesforcecom/ca/blog/2014/12/what-is-crmhtml. Hassan, A 2012, The value proposition concept in marketing: How customers perceive the value delivered by firms–A study of customer perspectives on supermarkets in Southampton in the United Kingdom International journal of marketing studies, 43, p68. He, Y 2012, A new approach to faster retail service and customer satisfaction: how NFC and RFID technologies may improve current retail business performance. Keith, S 2012, Coles, Woolworths and the local Locale: The Australasian-Pacific Journal of Regional Food Studies, 2, 47-81. Lee, M, 2013, January 18, NRMA, Coles tap Oracle for CRM, data warehousing, ZD Net Accessed 22 September 2015 from http://wwwzdnetcom/article/nrma-coles-tap-oracle-for-crm-data-warehousing/. 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