Case Study: Semester 2, 2018
A large clothing retailer wants to implement a CRM project. The company’s clothing retail business covers 85 retail stores in Australia. It also has other businesses such as travel, fashionable sportswear, and household furniture.
The company wants to revamp its billing system and provide more customer knowledge to its employees. Through the CRM project, the CEO of the organization wants to:
• Converge the company's multiple business lines in order to present a -single face to the customer.-
• Leverage the loyal customer relationships held within each individual business line,
• Assess the existing loyalty program and revise it if necessary, and
• Become the most preferred provider for all of the organization's best customers.
The CEO wants to institute several incentives such as free upgrades for high levels of purchases, single billing across all business lines, and special treatment for all multiple product users.
This might seem like an ideal situation - an enthusiastic CRM champion with money to spend and a mandate to purchase new technology. But the reality is, until recently, the CEO had difficulty implementing his plans.
While most business line executives acknowledged his enthusiasm, they continued to run their individual organizations as they had always run them - without cross-product discounts or special status.
In fact, the technology team building the new billing system initially faced a high level of resistance. Several of the business units did not want to share customer information, wondered who would fund the free products and questioned the benefits.
The company has an existing customer database (available on Blackboard). The purpose of the current loyalty program is to encourage customers for repeat purchase. Each dollar spent within the store will generate a reward point, which can be redeemed through gift voucher in the following way -
100 points = 0 $ gift voucher
100 - 200 points = 5 $ gift voucher
201 - 500 points = 10 $ gift voucher
501 - 800 points = 15 $ gift voucher
801 - 1200 points = $20 gift voucher
1201 - 1600 points = $25 gift voucher
1600 points = $30 gift voucher
The loyalty program has two cycles (six months each) per annum. The reward points do not have any expiry and can be accumulated in the following term. The administration cost relating to the loyalty program was $15000 (program launch = $7000; database creation and maintenance = $3000; Regular Marketing efforts and News Letter = $5000). The company targets to earn gross margin of 40% from its sales.
You are required to analyse the customer data and generate useful information for CRM strategy. You also need to assess the current loyalty program of the company and suggest if any revision is deemed necessary. Please follow the additional information regarding the case study (‘marking guide’ and ‘what to do’ file) available on Blackboard.