Coles Supermarket - Integrated Customer Relation Management Strategy - Case Study Example

COMPANY REPORT- INTEGRATED CRM STRATEGY (COLES SUPERMARKET) Name Course Instructor School Date Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Company Background. 5 3.0 Conceptual Background. 6 4.0 Analysis 10 5.0 Findings 12 6.0 Recommendations. 13 7.0 Conclusion 14 References List 15 1.0 Introduction Two important components exist in any business enterprise; the selling and buying of a given product. The sellers in most cases are recognized commercial enterprises such as supermarkets that have various chains spread throughout the country. The buyers, customers, or consumers play a pivotal role in of sustaining the business growth (Ahmed 2010). Customer relation management, commonly known as CRM tracks the record of current customers and also identifies future customers. Companies use three main components to track the behavior of their customers as well as establish loyalty to a given brand. The three elements are marketing automation, sales automation, and customer service. The three components need to be integrated to avoid duplicating customer’s information. Additionally, the three aspects are all interlinked in a cycle (Roberts-Phelps 2004). Marketing automation services seeks to provide services that will plan and execute strategies providing intelligent reports regarding customer’s trends. Sales automation helps to track the buying behavior patterns of the customers. It shows the products that the customers prefer. Customer care services, on the other hand, provide the required feedback coming from customers and help to resolve issues related to the customers. Marketing plays a crucial role of providing data that is utilized by the sales department. Similarly, the feedback derived from the customer care could be employed by the marketing team for new strategies. Sales automation has information about buyer’s preferences that could be employed by the marketing department (Anderson and Kerr 2002). Finally, the customer service will be provided with new information that will be incorporated into future market strategies. An integrated customer relation management helps to establish a better customer relationship (Fjermestad and Romano 2006). This report aims at examining the importance of the CRM system in Coles supermarket, Australia. The report will look at the current CRM strategy used and make recommendations on the use of an integrated approach containing the above three areas. 2.0 Company Background. Coles supermarket was founded in 1914. It is currently owned by The Wesfarmers and has established more than seven hundred branches across Australia. Currently, Coles Supermarket employs more than one hundred thousand employees. Its main rival, however, is Woolworth. The two supermarkets make up eighty percent of the number of supermarkets present in Australia. Over the past few years, it has been able to establish its brands ranging from drinks to other substances such as canned household products. The Coles network comprises of 762 supermarkets, 90 hotels, 642 convenient stores, and 831 liquor stores. In the year 2014 alone, its sales amounted to $37.4 billion. Coles supermarket has a loyalty program where customers who buy the product at their retail stores are awarded points. The flybuys program is a joint venture by both Coles supermarket and the Australia National Bank. The signing up of such an initiative is free and close to 2.7 million households are already under the program. The flybuys program has been running for more than ten years, and allows shoppers to enjoy discounts in any Coles Supermarket retail store. Coles supermarket has also adopted a low price strategy that enables customers to save on necessities. By offering lower for its products, Coles Supermarket has been rated as one of the most profitable companies in Australia. Also, Coles offers loyalty cards for its customers that provide various ranges of discounts. Similarly, Coles supermarket has identified an insurance car scheme. The insurance cover scheme has a discount card for fuel purchases. When a customer purchases fuel greater than $30, Coles gives a discount, attracting more customers to their loyalty programs (DR.K.VANITHA 2012). 3.0 Conceptual Background. Customers are one of the most valuable assets present in any organization. Thus, customers can be a source of threat or opportunity for any given organization. In today’s business world, any company wishing to grow and compete effectively in the market must strive to understand the needs of a customer. The theoretical models associated with customer relationship management include the three dimensions of thought, technology, and social information. Before the analysis of models, it is important to know and understand the meaning of customer relationship management and its relationship with customer relationship theory. The customer relationship theory states that once customers have established a relationship with a producer or supplier, they tend to obtain the product at the same place over a period of time. In other words, they become loyal to one business enterprise (Chua 2011). Customer relationship management has three important parts, including customer, relationship and management (Al-Badawi and Enayat Tabar, 2006). According to Al-Badawi and Enayat Tabar (2006), the customer is the person who engages in the activities of the enterprise. The relationship is the loyalty that is built over a period of time. Management refers to the use of creativity to guide or put the customer at the center of the organizational practices. Customer relationship management has been given various definitions based on four major classifications. The classifications include groups or categories involving technologies, strategy, information systems, and processes (Thompson 2004). The definitions can be CRM is part of an organizational strategy to identify and keep customers satisfied and ensure their conversion to repeat customers. ( Turban et al.,2003) CRM comprises of methods, processes and software systems that help organization to build organized and efficient customer relationships (Burnett, 2001) Customer relationship management, as a process that monitors clients by controlling data concerning clients. It also evaluates the data creating a database of information required when dealing with the customers (Hampe and Swatman, 2002). Customer relationship management is a business marketing strategy that integrates technological processes in understanding the activities associated with customers (Feinberg and Romano, 2003). From the definitions above, customer relationship management is a business strategy that seeks to optimize revenue, profitability and the satisfaction of customer services basing on the needs of the customer. Customer relationship management seeks to achieve various objectives in ensuring that they maintain the current customers as well as search for new customers. These goals are Reduce customer defection Increase revenue (Ranjan and Agarwal 2009) Reduced missed business opportunities Identify new opportunities Build customer loyalty Reduce costs(Goldsmith 2010) Store information concerning customers Reinvent markets (Sarafrazi and Memarzadeh, 2007) Commonly, three types of customer relationship management have come to exist. They are Operational CRM- the process of the marketing, sales and receiving feedback or customer service is vested in a person who can access the history of customers (Johan and Storm, 2002). Analytical CRM- refers to a set of tools, techniques or skills used to collect data (Paul and Jung, 2001). Collaborative CRM- an approach that integrates the three components of customer relationship management, marketing, sales and technical or customer care support in improving the quality of customer services and interactions. Customer relationship management models Two CRM models will be discussed in this case. The models are the life cycle model of Kalakota and the Swift model. The life cycle model is composed of three phases, including promotion, attraction, and maintenance. Each of the phases provides support to knowledge and assists in the understanding between the firm and the customer. The theory asserts that each of the phases have a different effect on communication with the customer ,and therefore, different strategies would be used by variousorganization as shown in the table below (Sarafrazi and Memarzadeh, 2007). Processes Actions Focus Centre of organization strategies Attraction Promoting the goods and services leadership Distinguish innovation Promotion Improving the profitability of existing customers separation Reducing costs- supplying new product Maintaining Customer retention for their life – provide services based on customer desire Adaptation According to customer – supplying s new product Table 1.The life cycle organizational CRM model The swift model is composed of several factors. They include; -Knowledge discovery- this involves the analysis of the characteristics of customers and the strategies involved in investment through a process that identifies, classifies and predicts customers of a particular organization (Berry and Linoff 2004). -Customer interaction- requires the implementation of CRM via relevant information at the correct time and provides products through the use of a different range of channels. -Market planning- requires the distribution definition methods offered to particular customers and the development of communication programs that are planned and are specific (Buttle, 2004). -Analysis of refinement: the analysis of data obtained through communication strategies for the purpose of future use (Swift, 2002). As a result, Swift defined CRM as a continuous learning process in which customer information establishes a relationship (Ranjan 2010). 4.0 Analysis Coles Supermarket currently uses both the life cycle model and the Swift model. However, the supermarket uses the life cycle model frequently. Key aspects of the life cycle model are the attraction, promotion, and maintaining aspects (Chris Adalikwu 2012). Coles Supermarket has been able to come up with new innovative products in the market. They established their brand of soft drinks and household products that easily distinguished them from their competitors in the market. In this regard, they took care of the innovative part relating to the life cycle model. Additional promotional services that are aimed at reducing the price of primary commodities have been utilized. This is clearly seen in the provision of discount rates to those customers who possess loyalty cards and flybuys coupons. Regular customers are provided with tickets that enable them to save on commodities. Maintaining of their existing customers is well exemplified by the provision of new services such as insurance coupons for cars. In addition, a discount is provided when fueling cars. The swift model was preferably utilized to collect information regarding the customers and their preferences to particular products available in Coles Supermarket. Through the use of knowledge discovery, Cole’s supermarket was able to identify the characteristics of their customers, and therefore, determine their sales preferences. Sales preferences would provide prerequisite information needed to do a market analysis of the products. Customer interaction majorly occurred at the customer service desk. It helped identify the choice of such customers towards specific goods. Additionally, it served to provide details or personal information concerning the client (Jones and Ranchhod 2007). Market planning and analysis refinement served to provide the relevant information required in the creation of databases that will follow the specific trends of the customers since it will have their contacts and their preferences for particular goods and services.However, an essential feature that is disturbing the supermarket is the independence of the entities. Each category, although utilizing different processes, depends on its own (La and Yi 2015). Cole’s supermarket offers excellent customer service to its customers. Feedback information is provided via the use of emails, phone service, and an online system. Their information system can keep track of the activities of their customers. Such information is important in determining customer preferences to be used for future marketing strategy (Raab 2008). Their sales department utilizes a low pricing strategy that helps maintain customer’s’ loyalty. Additionally, the low price strategy shows the preferences of the customers towards specific products. Marketing strategy involves the identification of new customers by the provision of new services such as discount prices. Such prices attract new customers to come overboard. It also maintains the existing customers since they also benefit from the discount prices (Makasi 2014). 5.0 Findings Coles Supermarket has developed a database that it uses to provide discount coupons and loyalty cards to its existing customers. However, the company faces issues in the implementation of the customer relationship models due to some factors. Some of their employees are not sufficiently trained in handling the needs of the customers. Their communication and interaction with employees is still poor. Furthermore, they do not know how to utilize the new technology that is coming up. Another factor discovered that hinders the customer relationship model is the lack of synchronized information on one database. The company needs to invest a considerable amount of capital in information technology related equipment. There is also a need for the company to redesign most of their process via the business process reinventing (Nassar 2015). Therefore, the company requires a new customer relationship management strategy. 6.0 Recommendations. Structure – for customer relationship management to become efficient, it is necessary that the three main areas involved in the customer relations become integrated into one complete system. Such a system would avoid duplication of information relating to a particular customer. Additionally, it will reduce the administration costs and increase efficiency and delivery of services to the users (Peppers and Rogers 2000). Culture – integration of the system is required at the various levels. An integrated system acts as one system. Employees will have to be sensitized to the need of working together. Different departments should encourage their employees to work together with the various employees of variousd epartments to meet the certain goals set out by the business enterprise (Nykamp 2001). Technology – information technology is essential in the creation of databases that keeps all the relevant information. Much investment should be put in place as IT serves as the backbone for monitoring all activities related to the consumer (Peelen 2005). Processes-once the departments have started working together, they will make significant effects on the integration of various approaches. 7.0 Conclusion Customer relationship management is an integral system required by any organization in maintaining the existing customers as well making room for new customers. Primarily, it utilizes practices such as the reduction in sales, innovation that is a new marketing strategy and maintaining of their customers through discount initiatives. Though adequate information has been collected regarding the customer’s trends and behaviors, the system has not been well integrated, thus, providing instances where there could be a replication of data regarding customers. To eliminate such practices and reduce the costs involved, it is imperative for Coles Supermarket to integrate its practices to be able to meet the demands of their customers (Sinisalo and Karjaluoto, 2007). References List Ahmed, A. 2010. “Customer Relationship Management through Communication Strategy.”International Journal of Customer Relationship Marketing and Management, Vol 1, No 3, pp.15-26. Al-Badawi, A. and Enayattabar, M. 2006."Customer Relationship Management in Electronic Environment". Fourth International Conference, Tehran. 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