By Steve Rowen, Managing Partner
6/30/2009
We’d like your insight. The average customer is less inclined to spend right now than she was just 12 months ago. However, the tough economy has accelerated retailers’ need to better understand their customers and design offers that actually do get them out shopping – and buying. On the one hand, this isn’t new. Just last year, our Next Generation of Retail CRM report showed customer programs and customer relationship management still receive retailers’ highest priority internally, but between scattered customer data, the driving need for better customer insights - achieved faster - and challenges around implementing promotion optimization, getting to the "right offer at the right time to the right person" isn't as easy as it should be.
This year, we want to know how the best-performing retailers are targeting their customer communications. We launched our Driving Customer Demand in 2009: What Does it Take? survey just a few weeks ago, and want to find out which players are making the most headway in converting raw data into powerful insight. For those who are actually outperforming even in a dismal market, we want to know which customer relationship management technologies they are currently using – and which are they budgeting for.
So far, early results tell us loyalty programs still hold center stage. Most respondents have been utilizing a loyalty program for some time (27% for 1-5 years, 4% for more than 5 years, and 15% for more than 10 years). Eight percent are quite new to the game (less than 1 year,) another 8% have plans to launch in the next 12 months, and 15% are in the planning stages. As our respondent pool grows, we’ll examine the differences between the best performers and those behind the curve, how large retailers’ tactics vary from those of their smaller brethren, and how different segments approach the tasks of gaining (and keeping) customers' loyalty. At this point, what we can offer are some big picture statistics.
When asked to identify the top three challenges serving as drivers for their current customer relationship strategy, our respondents point to increased customer price sensitivity (61%) as their highest priority. This was true last year as well (48%), but clearly has risen in importance. The steep upwards trend year-over-year is not surprising, given the impact of consumer “skittishness”. It has topped the list of retailers’ challenges in virtually all of the research we’ve conducted in the past several months.
However, we were somewhat surprised to see that both the need to attract new customers and the ability to retain existing customers are currently tied for second place at 57%. We thought with the economic events that escalated late in 2008, retailers would be far more interested in simply trying to hold on to the customers they already had, and in aggregate, had all but abandoned the notion of penetrating new markets. This is certainly encouraging, as is the relatively small number of respondents who rank “the economy making a tough retail environment” as a top challenge (17% compared to last year’s 40%). When taken together, these data points indicate that – for our early respondents – the economic tide is shifting, they are less likely to blame “the weather” (or in this case, “the economy”), and that they are equally focused on bringing new blood into their four walls of business this holiday season as they are in keeping their base happy.
It is also worth noting that 39% of our early survey takers point to the consumer’s growing demand for an enhanced level of customer service. This is a slight dip from last year, when it was listed the second largest challenge facing retailers. Given that Walmart’s price can’t be beaten, and product looks increasingly the same from one retailer to another, perhaps retailers who are looking to differentiate themselves with a service-centric model are making headway.
This report is not scheduled to launch until mid August, so we do hope you weigh in to share your experience as soon as you have the time. Your input could change these numbers drastically. As always, survey takers’ personal information will not be shared with anyone.
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