Like the online purchasing system, the MoneyBack card records customer purchasing activities. PARKnSHOP can use this information in order to implement a more successful e-CRM strategy in the future.
Benefits
Throughout implementation of Customer Relationship Management, firms may benefit through the following ways:
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Indicate the responses with the sales strategies of the company.
Whenever PARKnSHOP launches new promotions and products, the responses from the customers can be known immediately through different channels such as sales volume and customers’ opinion on the internet. Since the online purchasing system and MoneyBack program record the purchase activities of the customers, PARKnSHOP can analyze the difference of these records before and after implementing the promotion. It would show the effectiveness of its promotion strategy. For example, currently PARKnSHOP targets to promote LEE KUM KEE OYSTER SAUCE to housewife, and PARKnSHOP offers LEE KUM KEE OYSTER SAUCE with 20% off. In the following days, PARKnSHOP can analyze the sales records in the online purchasing system and MoneyBack program to see that whether more females who are between ages 35-60 go to buy this product during this period. Concordantly, PARKnSHOP can know whether the promotion was successful or not.
Through CRM, PARKnSHOP can process and store the information for further analysis. This specific data is stored in the database and will be valuable for future business.
- Understand the value of a particular customer.
Different customers have different values. If we understand the values of individual customers, we can use ABC analysis to separate each specific customer. Category A customer is more profitable than category B customer; therefore we should maintain more discounts for the category A customer. That means PARKnSHOP can recognize the need to provide the most profitable customers with service levels that encourage repeated business.
How does PARKnSHOP distinguish the different levels of customers? One of the methods can be regarded from the MoneyBack Application Form next page.
Whenever a customer (usually the mother in a family) applies for the MoneyBack card, she has to fill in the application form. On the application form, there is some specific information that the applicant has to provide. This includes: education level, occupation, family status, usual purchase behaviors, interests and monthly household income. All this information is recorded and then used to help in identifying the customer. For example, by analyzing the monthly household income, PARKnSHOP can classify the customer into the different customer groups.
Through proper analysis of the information customers provide and the records on the MoneyBack database system, PARKnSHOP can release different discounts to (apply different strategies on) different customer groups through the Personalized Shopping List.
- Greater emphasis on customer retention through loyalty-building.
After introducing the MoneyBack program, PARKnSHOP is able to provide custom-made discounts for each individual customer by issuing the Personalized Shopping List in the MoneyBack Member Privilege Kiosk. The list is based on your own personal profile and previous shopping history to provide you with special offers. The special offers are tailor-made just for customers. It also rewards customers by issuing cash vouchers which will encourage them to purchase again. Another example is that the database systems analyze customer preference and therefore PARKnSHOP will release different special offer mails to the target customers. When you are going to register an online account, there is a notice about the use of the information.
There is no doubt that customers are receiving better service and quality which in turn builds loyalty.
- Identify customers’ perceptions and needs rapidly.
CRM can provide first-hand data about the customers’ preferences and needs. This data is directly taken from the customers – hence it is accurate and reliable. Since the data can reflect the trends of the market demand, PARKnSHOP can react to the market demands immediately. Some items have seasonal sale such as ice-cream. The demands of these items are not constant year-round. Therefore, PARKnSHOP can analyze the transaction records in the CRM system to estimate whether the season is coming or not. On the other hand, it is possible for PARKnSHOP to know the latest purchasing trend of different age groups. Assume the most popular ice-cream among teenagers is Dreyer's. If they change their preference to favor HÄAGEN-DAZS rather than Dreyer's, the change of teenagers’ preference could be noticed by the CRM system. After analyzing this data, PARKnSHOP might adjust the slotting fee for keeping a good relationship with the suppliers which have high growth rate.
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Predict customer behavior.
The CRM system records customer buying patterns. The MoneyBack Card will record the list of purchased products whenever the card reaches the reader. Hence, the purchased goods will be recorded by PARKnSHOP. This data is constantly under analysis in order to provide useful information. There are some parallels between different transactions. For example, if a housewife buys a packet of rice, she probably also buys a pack of toilet paper; if a man buys face wash, he probably also buys shaving cream. Using this type information, PARKnSHOP can estimate what customers are going to buy next. The managers could also design the layout of the store better. They might separate the relevant products apart, so those customers need to ramble through the whole store. This increases the chances for customers to spend money in PARKnSHOP. In contrast, the managers may put the most relevant items on the same shelf. This is friendly for customers to find what they want. Anyway, the CRM facilitates PARKnSHOP to estimate customers’ buying behavior and setting up the store layout.
- Maximize the efficiency of PARKnSHOP
As we know, ABC analysis can be developed after having a customer buying record. PARKnSHOP can target the most profitable customers who are the most frequent purchasers in the store. Then, PARKnSHOP can put more effort into satisfying the most profitable customer and reduce the cost spent on the lower valued customers. Customers may receive from PARKnSHOP or from their affiliated companies from time to time telephone calls, e-mails and direct mailings containing promotional materials. After separating customers into different group, PARKnSHOP would only make telephone calls to the targeted customers. That’s why we said the CRM system could enhance the efficiency of PARKnSHOP and improve the allocation of resources. If you read the Privacy Policy of PARKnSHOP, you can find the following content in the direct marketing. “If you have once given us your personally identifiable information, you may receive from us or from our affiliated companies from time to time telephone calls, email and direct mailings containing promotional materials. If you do not want to receive them, please write to our Customer Services Manager. You may be asked to indicate your preference before signing up for any of our paid services.” You may also read the above Privacy Policy through this website: http://www.moneyback.com.hk/Web/PageFrame.do
Problems
The following are the obstacles of implementing CRM:
- Cost of installation is high.
Installing CRM is expensive. The company will need to put in more effort and time. Usually, companies fear whether the revenue generated will cover such a large amount of cost and therefore do not consider such an investment. Since a CRM system needs to continuously collect data, the maintenance cost can be heavy. This means the total cost of operation is extremely large.
- CRM software may not be suitable for the company.
After CRM is installed, company may find the software difficult to use and adapt to. In this case, CRM will eventually become a burden towards the company. This situation happened in “GOODWAY CO”. After the implementation, the company began to realize the software was not stable or flexible, and was encumbered with the poor adaptability. “In hopes to improve productivity and create more visibility for its sales team, Goodway decided to implement a customer relationship management (CRM) program. However, problems began to emerge after its initial solution was deployed. The software was not stable or flexible, and became a burden for its sales team rather than a source of support.”(Please see appendix for details). Companies should perform research to choose the most suitable CRM software in order to prevent resource wastage.
- The security of customers’ privacy is unknown.
Customers’ buying habits are an important resource. Some companies lack proper ethical procedures and try to invade the database of the CRM system. If the company succeeds, customers’ personal information and buying patterns will be exposed. Consequently, the customers’ privacy is in danger if the security of the system is not good enough.
Recommendations
Different companies will always need to constantly be improving themselves in order to keep up with its customers’ needs. Below you will find some suggestions that we have for PARKnSHOP to increase its customer base and expand its business.
1. Family members should have their own check list.
At some PARKnSHOP stores, there is a MoneyBack machine placed at the entrance. Parent/Mini card holders can check the discount list from the machine and exchange the reward points for a cash voucher. However, card holders in the family – including 3 mini card and 1 parent card holders – get the same discount list. PARKnSHOP provides the discount list in a family basis but not in an individual basis.
If PARKnSHOP can provide a specific and personal discount list and allow the card holders to still gain reward points on a family basis, it would be much better. For example, youngsters usually purchase snacks and soft drinks in PARKnSHOP. Compared to their parents – who likely purchase the necessities such as packets of rice and food oil – they have different purchasing habits. However, the discount list will not show the entire list of products suitable for both parents and children. Thus, if PARKnSHOP could develop a specific discount list for each individual, it would help to maintain a good relationship with every customer.
2. Implement a new and private cashier to enhance customer satisfaction and promote the MoneyBack Card.
Currently, the first process of purchase in PARKnSHOP is “Do you have a MoneyBack card?” asked by the cashiers. It is quite a dummy and annoying process. In addition, the query in PARKnSHOP is always long. Regarding these two problems, we suggest PARKnSHOP to open a new cashier query which is reserved for the MoneyBack Card users.
As this new cashier serves MoneyBack Card users only, cashiers are not required to ask “Have you get a MoneyBack Card?” anymore. Since the customers in the query are all MoneyBack Card members, unsmooth mechanisms of purchase can seem to be diminished. Why do we say it seems to be diminished? It is because only allowing MoneyBack Card users to use the cashier may not surely shorten the waiting time as the cash transaction and item scanning mechanisms still exist. But unifying the user group of the query can still make customers feel that the query will be short. The theory behind this concept is similar to that applied in most theme parks. Usually, the queries for each attraction are very long. However, In order to make customers feel more comfortable, the theme parks place “10 Minute Wait” notice boards at a particular location of the query even through the fact is that it takes about 30 minutes to wait. In using a similar methodology, customers will therefore be more satisfied with the services provided by PARKnSHOP.
Furthermore, the customers will have an impression that their query is specially reserved which will make it seem that the users of MoneyBack Card are privileged. It is a bit similar to the psychological strategy of having VIP members. Because of the privilege, customers are more willing to join the MoneyBack Card system and therefore the CRM management will have more support.
With the new cashier, customer waiting time can be reduced and their satisfaction will hence increase. Also, the attractive power of MoneyBack Card is added and thus CRM is improved.
3. Outsourcing e-CRM system to another company.
As we mentioned in the potential problems, e-CRM software may not be suitable the company. In some cases, a poor e-CRM system even becomes a burden towards the company. One of the possible solutions is to outsource the e-CRM system to another company. This company can provide professional, technical, and functional support. They have professional maintenance teams to solve the errors and storage problems found in this type of e-CRM.
On the other hand, outsourcing e-CRM system can reduce the risk of investment. A professional e-CRM system provider has experience in customizing an e-CRM system. If PARKnSHOP found the existing e-CRM system cannot match up with the growth of its business five years later, PARKnSHOP would suffer a huge loss in this investment. The e-CRM system provider can eliminate this situation by making sure the mix of hardware, software and service is right. Besides, after outsourcing the e-CRM system, PARKnSHOP can concentrate on other business factors such as purchasing, exploring new markets, and analyzing its competitors, etc.
In order to choose a right company, we should focus on the reputation of the company. Reputation is more important than how much the company charges. This is because the privacy of customers might be leaked if the company does not practice proper ethical procedures.
One of the most critical issues in outsourcing the e-CRM system is whether or not the cost is too high. Actually, the amount of money charged by an e-CRM system provider is not quite expensive. However, after outsourcing, PARKnSHOP can reduce the size of the department which is in currently in charge of the CRM system. It also does not need to hire extra professional technicians. After considering the above aspects, we think it is a possible improvement for PARKnSHOP.
4. Apply shoppingcarts as cashier systems
Technologies can make life easier and provide help for the common things of life. Automatic cashier systems therefore make shopping more efficient and comfortable. A way to offer people a better shopping experience with the help of implemented systems would be to implement such cashier systems which are inside the shopping car. The article that the customer is going to buy should just be put into the wagon. At this time the shopping cart is scanning the article with the help of infrared scanning lines, which are scanning the products. On the products are bar codes or implemented chips such as RFIDs which has information about the price, weight, size, special offers and also background information and other useful things. The shopping cart has also a screen where the customers can see the given information. If the shopper has finished his buying he gets out of the shop and the whole shopping car will be scanned at the door. The amount of the products will be then withdrawn of his octopus card, which had been inserted by the buyer at the entering of the shop. This technology makes shopping simpler and helps to save costs for PARKnSHOP. But the ethical and social issue is that a lot of people will lose their jobs except the extra cashiers at the MoneyBack desk. These people could also be consultant for the customer and could accompany and advise the people while they are shopping. Instead of firing the people, the employees could be used for consultancy. This would also encourage and engage the customer’s satisfaction and loyalty. Besides that, the people would be more involved into the shop and don’t feel as just “normal” shoppers. If PARKnSHOP would implement this concept as a first mover it could gain advantages of a good reputation and also sales increases as a first market enterer in this kind of “shopping experience”.
Conclusion
The MoneyBack Rewards Card records costumers’ buying pattern. These records help to provide better customer service and enhance customers’ loyalty. They also help PARKnSHOP setting market strategy. However, there are some potential problems that PARKnSHOP may have. We hope that PARKnSHOP can implement our recommendations and they could solve the potential problems. Electronic Customer Relationship Management seems to be playing a very important role in PARKnSHOP. It would be judicious to maintain and continuously improve the e-CRM.
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References
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PARKnSHOP. (2008, 12 6). PARKnSHOP. Retrieved from PARKnSHOP: http://www1.parknshop.com/WebShop/Home.do
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Rigby, Darrell K.; Frederick F. Reichheld, Phil Schefter (2002). "Avoid the four perils of CRM". Harvard Business Review 80 (2): 101–109.
- SauersCarson.Amy. (2008). Effective customer relationship management : how emotion drives sustainable success. Amherst: Cambria Press.
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Baran, R. J. (2008). Principles of customer relationship management. Ohio: Thomson.
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PARKnSHOP. (2007, 1 9). Frequently Asked Questions. Retrieved 12 2, 2008, from MoneyBack: http://www.moneyback.com.hk/Web/PageFrame.do?pTitle=title_t_c&pName=t_c
Appendix
