Table of Contents
Factors affecting Customer retentions:
Background:
The foundation of Shopper’s Stop was laid on October 27, 1991 by the K. Raheja Corp. group of companies in Mumbai. Shopper’s Stop is a chain of lifestyle stores, retails garments and household accessories. It has a team of dedicated merchandisers, store staff and its store portfolio comprises casual wear, ethnic wear, formal wear, party wear and sportswear for Men, Women and Kids. The chain also sells various types of accessories, shoes, caps, scarves, cosmetics and perfumes. From its inception, Shopper’s Stop has progressed from being a single brand shop to becoming a Fashion & Lifestyle store for the family. Today, Shopper’s Stop is a household name, known for its superior quality products, services and above all, for providing a complete shopping experience. The main competitors of Shopper’s Stop are Westside, Pantaloons, Globus, Pyramid and many small retail outlets. Shopper’s Stop is the only retailer from India to become a member of the prestigious Intercontinental Group of Departmental Stores (IGDS). The IGDS consists of 30 experienced retailers from all over the world, which include established stores like Selfridges (England), Karstadt (Germany), Shanghai No.1 (China) , Manor (Switzerland), to name a few.
Introduction:
The practise of relationship marketing by Shopper’s Stop and its benefits through its customer loyalty program called ‘The First Citizen’ and other factors affecting customer retentions are articulated in the report. Employee loyalty program called ‘Winners are Champions’ by Shopper’s Stop is discussed in the report as it is one of the important factors for the store to retain their customers. The role of CRM in developing and maintaining relationship marketing is also discussed in the report. Genuine relationship with customers involves a mutual fulfilment of promises, with benefits flowing to all customers, organisation as well as to employees and thus helps to create win-win-win scenario.
Organisations’ relationship marketing:
Shopper’s Stop is highly involved in relationship marketing in order to retain their regular customers and turn their new customers into regular clients. Shoppers Stop’s customer loyalty program is called The First Citizen. The program offers its members an opportunity to collect reward points and avail of numerous special benefits. Currently, Shoppers’ Stop has a database of over 250 thousand members who contribute to nearly 50% of the total sales of Shoppers’ Stop. (). They have developed many customer loyalty programs to their exclusive First Citizen cardholders and also offers Credit card in collaboration with Citibank to their customers that gives access to a range of bonuses, discounts and special rewards like invitations to special events, exclusive offers and more shopping credits for members. In 2007, Shopper’s Stop was awarded second position in Consumer Loyalty Survey by Customer Satisfaction Management & Measurement (CSMM) - Business World Consumer Loyalty Survey.
Factors affecting Customer retentions:
Financial bonds: Shoppers Stop offers reward points for every purchase made by the members and offers service upgrades from Classic Citizen Cardholder to Silver Citizen cardholder and finally to Gold Citizen cardholder after a customer has crossed a slab of Rs.1000-15000 , Rs.15000-40000, and Rs.40000 and above respectively and it offers gift certificates and discounts to its members. Shoppers Stop has typically built their enrolment condition in the order of the size of an individual bill i.e. customers who buy more than a certain amount in a single bill are entitled to membership of the loyalty program and are explained the benefits. A very small membership fee of Rs.168 is charged as it has a significant impact on consumer attitude and choice. A membership fee is considered as a sunk cost as far as it is not transferable and after making an investment in the company and incurring a sunk cost, consumers become hesitant to switch as they would feel uncomfortable “wasting” the investment (Dick 1995). During the time period where the fee is still effective at insulating the firm from competition, the consumer hopefully will make repeated visits and have several positive experiences at the store. As a result of these repeated positive experiences the consumer may then begin to exhibit longer-term loyalty. The idea of an enrolment process of this type is to enrol customers quickly, and quickly encourage them to build contract through numerous offers. Once a customer has built up a significant base of past purchase with a store, this creates an exit barrier and makes it difficult for other stores to wean away its contract.
Social bonds: They offer exclusive shopping days to get hold of latest merchandise, advanced sales notices, invitations to special events and time saving benefits in the form of exclusive checkout lines and reserved parking for their members. In the context of service recovery, Shoppers Stop have liberal return and refund policies and immediate service repairs and also free home delivery of returns and alterations for their Gold citizen cardholders.
Structural bonds: Shoppers Stop offers catalogues of various merchandises online on their website and customers can also shop and order online. They provide free delivery but only to restricted areas of Mumbai, Navi Mumbai and Thane. In the event that any merchandise ordered from them is not received in good condition, is damaged or defective and if customers are not entirely satisfied with their purchase, they may exchange or return most items bought from shoppersstop.com within 14 days from the date on which these goods are delivered.
Employee satisfaction/Loyalty: Employee satisfaction is a driver for customer retention and growth. While competing for customer business in an Indian retail market, Shoppers Stop competes for the young, multilingual, college graduates who they hire as their front-line employees. These employees work the retail floor and have primary contact with customers. They implemented a series of training, reward, and recognition programs designed to improve employee loyalty among their front-line employees. They revamped their salary structure, giving employees the opportunity to increase their variable pay through a reward system tied to performance in which net pay is directly linked to monthly performance. Individual monetary performance awards were improved by group reward programs; they called “winners are champions!” Under this group reward program, employees at each store are rated on product knowledge, operational skills, and customer feedback, with individual employee and supervisors are designated as champions and with the leading store receiving a substantial cash award divided among the team. Shoppers’ Stop also lashed out several non-monetary reward/recognition programs for strong employee performance. In addition, they gave employees a voice by implementing open employee/management forums, and creating an employee opinion page in their in-house magazine, ‘Retale’ (Badhe and Kashyap, 2004).
Benefits of relationship marketing:
In regards to organisation: Customer and employee loyalty programs helped Shopper Stop to develop positive outcomes including greater profitability, increased consumer loyalty, the costs to keep existing customers were lower than the costs associated with acquiring new ones and helped to develop more effective firm planning. Shoppers Stop became more knowledgeable about their customers’ needs and allowed them to offer services more customised to individual customers’ needs and wants. Customers were more tolerant in the instance of service failures. Regular customers perceived less risk and had greater convenience in purchasing related goods and services. Offering high levels of service, developed over years of carefully listening to each customer, it was less likely that other competitors can lure their customers away.
In regards to customers: Consumers were also benefited with the loyalty program of Shoppers Stop. The loyalty program offered exclusive benefits and privileges to their members and they earned reward points for every time they shopped at Shoppers Stop and these points can be redeemable against any merchandise from the store. Members experienced time saving benefits as store offered exclusive cash counters and reserved parking for them at Shoppers Stop so that they can spend more time shopping than waiting in a line and search for parking. Loyalty program offered various value added benefit to their members in the form of tie ups with other establishments such as discounts at leading hotels and coffee shops, tie ups with credit card companies, offered free tickets to movie shows/events sponsored by the store exclusively to members of its loyalty program and an exclusive newsletter informing developments in the store and a facility of nominating family members as First citizen members of the store.
In regards to employees: Employees are motivated with the compensation and reward system set by the company and eventually showed positive outcome by enhancing the sales volume with the increase in their personal income. Apart from that employees may feel job satisfaction and may desire to continue with the firm for the long time.
Role of Technology (CRM):
Customer Relationship Management software is implemented at Shoppers Stop and it enables to facilitate development of database of their customers and helps to increases its efficiency and effectiveness by reducing marketing costs, particularly those relating to mass communications, it facilitates targeting high-profit customers, creates opportunities for up-selling and cross-selling. CRM software helps to understand their customers' purchase patterns and also designs a database that allows them to track customers’ preferences and they are regularly informed by the store through email or by letter regarding sales, discounts, Offers and also informs when merchandise which is likely to appeal to a particular segment arrives in the store. CRM enables to analyze customer revenue and cost data to identify current and future high-value customers which in turn gives the firm greater ability to customize its services and to develop customer relationships.
Conclusion and Recommendations:
Shopper’s Stop is providing not only superior customer service but also maintains good relationship marketing with their customers through their customer loyalty program and through CRM. They are offering more value to customers by its First citizen loyalty program. Citibank and Shopper’s Stop have launched a Retail Co-branded card with MasterCard. The loyal customers of Shoppers stop are able to translate their credit card spends across all categories into incremental free shopping at the stores. Shopper’s stop is thus offering unsurpassed benefits through this type of schemes. However, with discounts and special offers the price sensitive customers will stay with the firm but may switch easily when another competitor has a cheaper offer, or engage in polygamous loyalty.
I would recommend Shopper’s Stop should emphasis more on creating social bond with their members and should benefit their members from personal recognition, extra attention, members- only concierge services and offer specific services not available to regular customers. It involves conspicuously recognizing customers for their special status. Social bonds can be created by access to dedicated service personnel. Social bond is regarded to be considerably more difficult for competitors to imitate than financial bonds and thus holds stronger potential for sustainable competitive advantage to a firm (Berry, 1995).
As Shopper’s Stop gives less importance to structural bonds and I would recommend them to develop structural bonds by helping customers manage their in-store time more effectively-one that would help them navigates through the store swiftly and reduces wait times. Shopper’s Stop should implement a Personal Shopping Assistant solution which includes innovative, cart-mounted computers that guide customers through the shopping experience. Right from the convenience of the shopping cart, customers gain access to personalized promotions on an aisle by- aisle basis and can quickly locate the products they need. They can avoid checkout lines by scanning and bagging items as they shop and completing their transactions using Self Checkout systems. To help shoppers keep their budgets in check, the system displays running totals of how much they have spent and saved during their visit. Customers can conveniently place orders from their carts and pick up their requests once the system indicates they are ready. Once Shopper’s Stop implements this solution on a broader scale and achieves strong user adoption, it can anticipate capitalizing on its loyalty data to enhance one to one marketing and drive down costs. They will be able to execute highly targeted programs based on a person’s historical spending. However, Shopper’s Stop requires heavy investment in maintaining structural bonds, but well executed structural bonds can raise the customer cost for switching to competitors and is regarded to be most difficult for competitors to imitate and holds strongest potential for sustainable competitive advantage to a firm (Berry, 1995).
Bibliography
Berry, Leonard L. (1995), ‘Relationship Marketing of Services – Growing Interest, Emerging Perspectives,’ Journal of the Academy of Marketing Science, 23 (3), pp. 236-45.
Dick, A. (1995), ‘Using membership fees to increase customer loyalty’, Journal of Product & Brand Management Vol. 4 No. 5, pp. 65-68.
Badhe, S. , Kashyap, P. ‘Loyal employees help bring in the business’, November 2004.
