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October 19, 2001

UK: KPMG, OXIRM highlight successes of e-tailers at Customer Relationship Management

E-tailers are leading the race to develop and instigate worthwhile Customer Relationship Management (CRM) techniques, leaving their bricks and mortar equivalents far behind, according to the latest Loyalty4profit research from business advisory firm KPMG and Templeton’s Oxford Institute of Retail Management

E-tailers are leading the race to develop and instigate worthwhile Customer Relationship Management (CRM) techniques, leaving their bricks and mortar equivalents far behind, according to the latest Loyalty4profit research from business advisory firm KPMG and Templeton’s Oxford Institute of Retail Management (OXIRM), at the University of Oxford.

In this latest study, KPMG and OXIRM focused on understanding loyalty strategies that can be specifically linked to profitability in online retail businesses. Patrick-Hubert Petit, global retail chair with KPMG, commented: “Keeping loyal customers is critical today and our latest research shows just how important the right CRM tools and techniques are in delivering loyalty.

“CRM can be costly […] however, the successes we have seen some businesses experience and the way CRM is being built into loyalty strategies should offer hope to those bricks and mortar companies who are not as far down this route as the leading e-tailers.”

KPMG and OXIRM’s ongoing global research programme into customer loyalty also shows however that it is generally easier and cheaper for e-tailers to employ CRM techniques, and that many online businesses are taking advantage of this.

The research has highlighted four different retailer loyalty strategies – pure, pull, push and purge. In a press release, KPMG explains: “The pure strategy focuses on strengthening the existing relationship between customer and retailer while the pull strategy aims to attract new customers by linking the retail offer to a complementary offer.

“Push focuses on a specific retail channel or location, pushing customers towards it by offering loyalty rewards only available through those channels.

“Finally, purge is adopted by those retailers who realise that one-to-one relationships are not as valuable for them as mass communication and who purge themselves of all loyalty schemes to focus on basic core brand values.”

 “These four strategies enjoyed varying degrees of success depending on which type of retailer-customer relationship was most prevalent within a business”, said OXIRM’s Richard Cuthbertson: “For example, a physical retailer-customer relationship favours a pure loyalty strategy […] however, a digital retailer-customer relationship benefits more from the pull strategy.”

Loyalty4profit has highlighted several examples of how CRM techniques are being used to increase customer e-loyalty, both by sole e-tailers and those store-based retailers who also operate online. The methods being employed include:

*Enhanced communication to provide greater product information and mechanisms for improved dialogue with users, for example the use of promotional e-mails and newsletters.

*Creating an offer or proposition specifically to meet key customers’ needs – adding extra services and information to websites, using in-store kiosks to promote use of the e-channel and not releasing personal information to other marketing companies.

*Using more relevant promotions – customising promotions, competitions and product bundles, partnering with other suitable websites and ensuring online promotions are available across all channels, including in-store.

*Rewarding loyal behaviour by accepting loyalty cards and store-branded credit cards through all channels and employing referral rewards for member-get-member programmes.

Patrick-Hubert Petit concluded: “Generally low levels of customer loyalty can be a fact-of-life for many retailers so it’s not enough to just have a value proposition and marketing strategy for the business. 

“CRM tools are emerging as key way of maximising the impact of a chosen loyalty strategy, with the e-tailers leading the way.  All businesses need to know the type of customer relationships they have and to choose and implement the most suitable type of loyalty strategy if they are to maintain both profitability and a loyal customer base. ”

To find out more about the loyalty4profit global joint research programme, and to find out more anout the three previous reports on Customer Loyalty Cards, Private Label Products and keeping Customers For Life, click here.

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