CRM: Helping Apparel Companies Compete

By Jessica Binns
According to Gartner’s Key Issues for Retail 2011 report, customer-centric retailing practices remain a hot topic with large retailers that are constantly seeking new ways to use the power of analytics to grow their businesses. With the rise of social communities and multichannel retailing, customer relationship management (CRM) is becoming increasingly complex but remains a key to achieving retail success.

When it comes to adopting CRM and executing a relationship-management strategy, what challenges do apparel brands and retailers face? How can companies leverage the technology to not just survive — but to stand out?

CRM: a must-have?
It’s the twenty-first century. At this point in technology, can any apparel company afford not to have a CRM solution in place?

“We believe that customer relationship management is the number-one problem that all companies face,” says Shahrooz Kohan, CTO, AIMS Technology Solutions. “The key is to have an integrated system that includes both inventory/production management and CRM all in one. Add to that the ability to access these functions from anywhere, anytime and you have a solution that can save companies many thousands of dollars.”

As more and more companies implement CRM, it becomes the new standard for doing business, says Dave Burton, director, CRM products and services, Epicor. “Those companies that aren’t able to provide the personalized customer experience will eventually be left behind and struggle to survive.”

Scott Kallman, principal, Pure Karma, a start-up manufacturer of eco-conscious lifestyle apparel and activewear, agrees. “If you’re not armed with a CRM solution — in some rudimentary form — you’re not going to survive.”

“So much depends on the nature of the business, but the bar is certainly getting lower in terms of where a CRM package makes sense,” says Diana Ferraez, marketing manager, Jesta I.S.  “Apparel retailers that cater to the budget-conscious shopper may not use a full CRM package because the nature of the merchandise is entirely ‘opportunity buying.’ For these types of retailers, there is no need for creating campaigns promoting a particular line of merchandise.”

Furthermore, some retailers that offer low-end merchandise are simply trying to get as many customers through the checkout as fast as possible, and there is no time to capture any customer details, Ferraez adds. And some customers who shop at low-end retailers may not wish to be identified as a “low-end shopper.” On the other hand, those low-end retailers that offer loyal customers some reward for shopping with them will find a CRM package very useful.

Pitfalls
According to Ferraez, retailers often make three common mistakes when implementing a CRM solution for the first time. “The first is the attempt to capture everything there is to know about a customer the first time the customer makes a visit,” she says. The second mistake is forcing the CRM system to ask the customer questions at a specific point. The third mistake is blasting out to customers information — deals or promotions — that cannot be acted upon in the store.

When implementing a CRM solution, Ferraez explains, data must be captured on a piecemeal basis. Initially, the name and a contact identifier need to be captured. On subsequent visits, the system should prompt staff to fill in a missing detail — just one —until the CRM solution has all of the shopper’s necessary details.

  Because each customer is different, individuals may or may not wish to divulge certain pieces of information about themselves. “This is particularly true in mixed-gender environments where a young female customer may not wish to give a young male clerk her phone number — then again, maybe she would,” Ferraez says.

It’s important to provide multiple opportunities within a transaction to capture customer details, and the point at which those details are captured will depend on the relationship the employee has developed with the customer.

Notifications that are sent to customers to promote the brand, a line of products or an event within the store need to be made in conjunction with other systems within the enterprise to ensure, for example, that there is adequate inventory on hand to fulfill the promotion being offered, and the store systems will be able to process the transaction seamlessly. Ideally, simply identifying the customer should be enough to invoke the promotion without the customer having to “find the coupon” that was delivered to them, Ferraez adds.

According to Kohan, many companies are not willing to get their employees properly trained to work with new technologies. “CRM is a tool just like a knife,” he explains. “With the right training, the knife can perform surgeries and save many lives. CRM is also a tool to enable efficient management of the relationship between a manufacturer and a customer. However, this tool is only as good as its users.”

Epicor’s Burton agrees. Apparel retailers often don’t have a plan in place for what a CRM program will look like and how they want to use the system. “CRM is not a software solution — it’s a business philosophy that is supported by a software solution. Retailers need to develop a strategy for implementing the philosophy before they try to implement a software solution.”

Apparel companies also tend to think of CRM as just an “outbound” activity and fail to provide “dialogue-based” CRM, which incorporates customers’ suggestions about how to improve the process, says John Murphy, ApparelMagic. Moreover, another big mistake is limiting CRM strictly to the seller-customer relationship. “By incorporating the entire supply chain and getting feedback, status and suggestions from all parts of SCM, the end-customer’s experience is bound to improve, and that stimulates success all the way back along the supply chain,” adds Murphy.

Going mobile
Mobile CRM is certainly growing, but not at the expense of traditional CRM, says Ferraez. Traditional CRM makes customer information available within the store, usually accessed when the customer is paying for the merchandise. Mobile CRM, on the other hand, is being introduced and accessed while the customer is still roaming the floor. Sales associates with mobile CRM platforms are able to access the customer purchase history to determine what the customer has purchased previously and determine what inventory is available locally or in another store — without having to go to the cash desk.

“Creative retailers are using mobile platforms to get better at ‘filling in the blanks‘ on their customer data as the sales associate has more time with the customer and is better able to ask questions in a more conversational atmosphere. In short, mobile CRM is augmenting traditional CRM,” adds Ferraez.

Burton’s customers are expressing a high interest in mobility, too. “What I’m seeing is interest in iPad apps for customers, iPad interfaces for store associates to access customer information, SMS messaging, and mCommerce,” he says.

“In today’s world mobile is everything,” adds Kohan. “We see our users enabling customers and sales reps via web to access essential information about orders, invoices, and other information about their accounts.” AIMS’ users also are leveraging devices such as the iPad to access information about accounts, inventory and styles.

Kohan says that many smaller companies are enabling CRM via the web and mobile technology. This approach saves time for the salesperson and reduces costs for back-office personnel. “Imagine if you have the ability to allow your customers to see their order status, their invoices, print them, and allow them to communicate with you via the same interface.” As such, CRM technology can become an equalizer, enabling smaller brands to match the services of larger companies with greater resources.

Standing out from the crowd
Whether a retailer has one location and keeps its database in Microsoft Access or is a tier-one retailer with a very sophisticated CRM software solution, CRM can be used to help stand out from the crowd, says Burton. “It’s all about understanding customers and figuring out the best ways to engage with them. Smaller stores are often best at this because the more customers a retailer has, the more challenging it becomes to create personalized experiences for each individual,” he explains.

According to Ferraez, CRM essentially boils down to “what does the customer get out of it?” This can be a sense of belonging to an exclusive club, the understanding that the customer receives special treatment with offers tailored specifically for them, or simply the notion that the relationship with the retailer is intimate. From the retailer’s perspective, a good CRM package provides pinpoint accuracy into the buying patterns of each customer, and enables retailers to be predictive about an individual purchase, she says.

“When our clients first began using our CRM tools, they didn’t really understand how to leverage those integrated capabilities — ERP, PLM and accounting,” says ApparelMagic’s Murphy. “At first, they thought of integrated CRM merely in terms of contact management, sales follow-up, prospecting, task follow-up, generating mailings. (In military terms, you would say ‘tactics‘ rather than ‘strategy.‘) But as we’ve expanded our CRM offerings, our clients have kept pace, and have lately pushed the envelope much further, as a core part of their marketing and business strategies.”

ApparelMagic’s smaller clients — start-ups, boutique brands and spinoffs — leverage CRM to offer unique benefits for their customers. They analyze the sales patterns in ApparelMagic to create “micro-marketing” opportunities, Murphy explains. Several customers have created regional showroom events based on the buying trends they see in their ApparelMagic sales data. These events have included special collections, designed specifically for regional or vertical-market customers.

The manufacturer’s perspective
Kallman has been involved with six software implementations at companies ranging in size from $135-million enterprises to his current start-up based in Los Angeles, Pure Karma. He says that integrating ApparelMagic’s solution was the easiest process by far. What’s more, he says, it gives Kallman a competitive advantage as an employer. “What I can do is offer unique things like working from home if you’re a parent and need to be with your children,” he explains. “People are able to input their own information into the system — they can drive their own relationship management. I want those sales reps to have access to all of that data — when you input the information yourself, you’re recognizing business opportunities.”

ApparelMagic has enabled Pure Karma to elevate customer satisfaction. When a customer called the company looking for a popular top that had sold out, Kallman made a note in the CRM system to check if more would be manufactured by a certain date. And when the product became available again, Kallman looked up the notes, found the customer’s information and proactively sent the top to the customer’s daughter.

When apparel companies branch out from manufacturing to retail, having a CRM solution can be invaluable. “People think that once you have a web site, customers will beat a path to your door. It doesn’t work that way,” explains Kallman. “Having CRM data helps navigate geographic differences, product differences.”

Looking ahead
While many brands and retailers fail to leverage all of the features of a robust CRM solution, the more progressive companies think creatively and continuously innovate when categorizing customers and developing targeted content.
Social media remains a significant opportunity for apparel companies striving to manage relationships. Kallman says: “The next holy grail we’re all trying to figure out is: how do we take Facebook and Twitter and integrate them into some sort of opportunity that we can market to?”

Jessica Binns is associate editor of Apparel magazine. She can be reached at jbinns@apparelmag.com.