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MBA Project Report

MBA Project Report Dewan Jakaria Ahmed MBA,BBA (Marketing) Leading University, Sylhet

Dewan Jakaria Ahmed MBA,BBA (Marketing) Leading University, Sylhet


Customer Relationships Management in Retailing

(A study on clothing Business)

Management in Retailing (A study on clothing Business) This report is submitted as the partial fulfillment
Management in Retailing (A study on clothing Business) This report is submitted as the partial fulfillment
Management in Retailing (A study on clothing Business) This report is submitted as the partial fulfillment
Management in Retailing (A study on clothing Business) This report is submitted as the partial fulfillment
Management in Retailing (A study on clothing Business) This report is submitted as the partial fulfillment
Management in Retailing (A study on clothing Business) This report is submitted as the partial fulfillment

This report is submitted as the partial fulfillment of MBA program

This report is submitted as the partial fulfillment of MBA program

is submitted as the partial fulfillment of MBA program Project Supervisor Mr. Shamsu Uddin Shakib Lecturer

Project Supervisor

Mr. Shamsu Uddin Shakib

Lecturer of Marketing

Dept. of Business Administration

Leading University, Sylhet

Submitted By

Dewan Jakaria Ahmed ID -1101010735 Major in Marketing MBA, Dept of Business Administration Leading University, Sylhet

Submission Date

February 07, 2012

Letter of Transmittal

07 February, 2012


Mr. Shamsu Uddin Shakib

Lecturer & Project Supervisor

Department of Business Administration

Leading University, Sylhet

Subject: Submission of project report


With respect I am jakaria seeking your kind attention regarding this report.I have prepared my report on Customer Relationship Marketing in Retailing ( based on clothing business).By analyzing the retail market practically and using various tools I tried to prepare my report on my topic. I sincerely followed your guideline for preparing my report.

Now, my project report ready for submission. I hope this report will meet your requirements. So kindly accept this report and oblige thereby.

Obediently yours,

Dewan Jakaria Ahmed

ID- 1101010735

MBA (Major in Marketing)

Department of Business Administration

Leading University, Sylhet

Certificate of Completion


This is to certify that, Dewan Jakaria Ahmed, ID# 1101010735,MBA, Department of Business Administration of Leading University, Sylhet- has successfully completed his project work on ‗Customer Relationship Management in Retailing(based on clothing business)‘ under my supervision. As an integral part of the MBA program, after completing his credits in class activities, Dewan Jakaria Ahmed had been under my direct supervision during his project work time.

During the project work period, Dewan Jakaria Ahmed has taken and carried out my instructions to prepare the project report. He has collected the necessary information and undergone through the qualitative and quantitative studies. After completing the, studies he has prepared this report.

In this regard, I would also like to certify that, Dewan Jakaria Ahmed project work and report is exclusive and representative as per my knowledge. He has earnestly worked hard in this regard.

I wish every success to his life.

Mr. Shamsu Uddin Shakib

Lecturer of Marketing

Department of Business Administration

Leading University, Sylhet


I would like to acknowledge the guidance and effort of Internship and placement committee

for arranging such a nice program for co-relating theoretical learning with real life situation.

It‘s a pleasure to convey my heartiest gratitude and greeting to my honorable supervisor Mr. Shamsu Uddin Shakib, Lecturer of Marketing, Department of Business Administration, Leading University. Without his co - operation it would have not been possible to prepare the report into a nice ending.

I would also like to acknowledge and thanks the following personnel who has extended their

whole-hearted co-operation for preparing the report.

Mr Md Foysal ahmed and Saleh Ahmed the owner of Saleh cloth store and readymade corner

for their kind guidance and support during my project work.

Mr Khalil Ahmed the owner of Khalil Readymade and Mr Mintu the manager of Alahi cloth

for cordially helping in data collection and preparing my project.

I am also owe to Mr Pervez Ahmed and Mo hi Uddin for earnest co-operation.

Finally, I would like to convey my heartiest thanks and gratitude to a ll of my teachers,

friends, and many others who extend their support to prepare the report.


We shall be benefited of by our education if we can effectively apply the institutional education in practical fields. Hence, we all need practica l learning to apply theoretical knowledge in real world. This report is not only a report but it is the reflection of my practical experience in retail market. I tried to present here those things which I practically encountered and closely observed in rea l market.

I tried my best to conduct effective study by collecting current data. Even though if mistake appears, it is truly undesirable. So I would request to look at the matter with merciful eyes.

Executive Summary

This report has been made with my practical knowledge of how retailers manage customer relationships. Customers are the king in retail business and retailer acts as a facilitator to fulfill the needs of their customer (king). Retailers emphasize mainly on CRM to create loyal customer. Loyal customers are the maximum profit generating source of retailer. CRM enable retailers to identify their best customers and manage conflicting customer. Effective CRM implementation is possible if all the units of a retailer act simultaneously to ensure better service and satisfy customer uniquely. Proper allocation of resources and strategies to retain loyal customer are integral part of CRM.


Title No

Chapter 01-Scope,Objectives,Methodology and Limitations



Scope of the study



Significance of the study



Objective of the study



Research Methodology



Limitations of the Report



Chapter 02

(Theoretical Framework)






History of CRM



Why Customer Relationship Management?



Ways to keep customer for life



Things need to done for CRM



Key CRM principles



CRM programs



Architecture of CRM



Tools needed for CRM



Chapter 03 (CRM in Retailing)



What is retailing?



Necessity of CRM in retailing



How retailers benefitted by CRM



Satisfaction drivers for building relationships in retailing



Process of CRM in retailing



Collecting Customer data



Customer database



Approaches for collecting information



Analyzing customer data and identify target customer



Data mining



Market basket analysis



Identifying market segment



Identifying best customers


Lifetime value


Customer pyramid


RFM (Recency, Frequency, Monetary)Analysis



Developing CRM programs



Retaining the best customers



Converting good customers into best customers



Dealing with unprofitable customers



Implementing CRM process in retailing



Critical success factor implementation of CRM in retailing



Reasons for CRM implementation failure in retailing



Suggestion for successful implementation of CRM in retailing



3.9 Conclusion



3.10 References



Scope of the Study

The scope of this report is to analyze the customer relationship management (CRM) in retailing (clothing business) from the stages of collecting customer information to the successful implementation.


Significance of the study

The CRM (customer relationship management) is an integrated effort to strengthen the network of relationship for the mutual benefit of both the retailer and customer. The biggest management challenge in the new millennium of liberalization and globalization for a business is to maintain good relationship with the king the customer. This study is of great significance because

A 5% increase in the customer retention will increase the profit up to 125%.

It costs five times more to attract a new customer than to serve an old one.

20% of the company‘s loyal customers account for the 80% of its revenues.

To study on customer relationship management has enabled me to know about the CRM practices adopted in the retail industry (clothing business).


Objectives of the study

To study the current practices of CRM in retailing.

To find out the impact of CRM on the profitability of the clothing business.

To study the factors affecting the CRM practices.

To study the methods and tools for implementing CRM in retail sector (clothing business)

To study the necessity of CRM in retail sector as well as suggesting them the ways for successfully implementing it.

1.3 Research Methodology

A research design is simply a plan for study in collecting and analyzing the data. It helps the researcher to conduct the study in an economical method and relevant to the problem.

Research methodology is a systematic way to solve a research problem.

1.3.1 My research design for CRM analysis in retailing

The study conducted here is exp loratory and descriptive. I also closely observed the retail

market so observational technique played vital role in my study.

1.3.2 Collection of the data

There are two types of data I collected for my study.

Primary data primary data is that data which is collected for the first time. These data are

basically observed and collected by the researcher for the first time. I have collected primary

data by asking questions.

Secondary data secondary data are those data which are primarily collected by the other. I

used secondary data to obtain structure of doing my study. I also used existing literature to

clarify CRM concept.

1.3.3 Data collection

Data is collected t via using questionnaire.

1.4 Limitations of Customer Relationship Management

By studying a few retail market it is hard to assume the overall CRM policy used in retail industry.

Information gathered from retailers may not fully truthful because no retailer shows their weakness.

Lack of retailer knowledge about modern CRM concept.

Time constraint is unavoidable limitation of my study.

As few works has been done earlier in this regard so scarcity of secondary data is also there.

Inadequate disclosure of tactical information by retailer is also the problem.

2.0 Introduction

The biggest management challenge in the new millennium of liberalization and globalization for a business is to serve and maintain good relationship with the king the customer. In the past producers took their customers for granted, because at that time the customers were not demanding nor had alternative source of supply or suppliers. But today there is a radical transformation. The changing business environment is characterized by economic liberalization, increasing competition, high consumer choice, demanding customer, more emphasis on quality and value of purchase etc.

All these changes have made today‘s producer shift from traditional marketing to modern marketing. Modern marketing calls for more than developing a product, pricing it, promoting it and making it accessible to target customer. It demands building trust, a binding force and value added relationship with the customers.

“Customer relationship management (CRM) is a business strategy to acquire and manage the most valuable customer relationships. CRM requires a customer-centric business philosophy and culture to support effective marketing, sales and service processes. CRM applications can enable effective customer relationship management, provided that an enterprise has the right leadership, strategy and culture.”

The process of developing a cooperative and collaborative relationship between the buyer and seller is called customer relationship management shortly called CRM.

2.1 History of CRM

Customer Relationship Mana gement (CRM) is one of those magnificent concepts that swept the business world in the 1990‘s with the promise of forever changing the way businesses small and large interacted with their customer bases.

In the beginning…

The 1980‘s saw the emergence of database marketing, which was simply a catch phrase to define the practice of setting up customer service groups to speak individually to all of a company‘s customers.

Advances in the 1990’s

In the 1990‘s companies began to improve on Customer Relationship Management by making it more of a two-way street. Instead of simply gathering data for their own use, they began giving back to their customers not only in terms of the obvious goal of improved customer service, but in incentives, gifts and other perks for customer loyalty.

True CRM comes of age

Real Customer Relationship Management as it‘s thought of today. Instead of feeding information into a static database for future reference, CRM became a way to continuously update understanding of customer needs and behavior. In recent years however, several factors have contributed to the rapid development and evolution of CRM. These include: -

The growing de- intermediation process

Advances in information technology

The growth in service economy.

The total quality movement.

Changing Customer expectations

Intense competition.

Retaining customers is less expensive than acquiring new ones.

Necessity to have global account management for the customers.

2.2 Why customer relationship management?

A satisfied customer in 10 years will bring 100 more customers to the company.

It costs 5 times more to attract a new customer than to serve an old one.

20% of the company‘s loyal customers account for 80% of its revenues. (Pareto‘s


The chances of selling to an existing customer are 1 in 2, the chances of selling to a

new customer are 1 in 16.

2.3 Ways to keep customers for life

1. Every part of the company‘s marketing effort should be geared towards building lifetime relationships.

2. People want to do business with friendly people. To have effective relations a friendly attitude must permeate in the organization.

3. Information technology developments should be positively used to serve the customers.

4. The company should always be flexible to bend its rules and procedures in the client‘s favor.

5. The company should communicate with its customers even when it is not trying to sell something.

6. The company can communicate and develop stronger customer bonding by providing financial and social benefits.

7. The company should try to know all its customers including their lifestyles, hobbies, likes and dislikes etc.

8. The company should make it a point to deliver more than what is promised.

2.4 Things need to done for CRM

A good CRM program can improve customer service by facilitating communication in several ways :

Provide product information, product use information, and technical assistance that are accessible 24 hours a day, 7 days a week.

Identify how each individual customer defines quality, and then design a service strategy for each customer based on these individual requirements and expectations.

Provide a fast mechanism for managing and scheduling follow- up sales calls to assess post-purchase cognitive dissonance, repurchase probabilities, repurchase times, and repurchase frequencies.

Provide a mechanism to track all points of contact between a customer and the company, and do it in an integrated way so that all sources and types of contact are included, and all users of the system see the sa me view of the customer (reduces confusion).

Help to identify potential problems quickly, before they occur.

Provide a user- friendly mechanism for registering customer complaints (complaints that are not registered with the company cannot be resolved, and are a major source of customer dissatisfaction).

Provide a fast mechanism for handling problems and complaints (complaints that are resolved quickly can increase customer satisfaction).

Provide a fast mechanism for correcting service deficiencies (correct the problem before other customers experience the same dissatisfaction).

Use internet cookies to track customer interests and personalize product offerings accordingly.

Use the Internet to engage in collaborative customization or real-time customization.

Provide a fast mechanism for managing and scheduling maintenance, repair, and on- going support (improve efficiency and effectiveness).

The CRM program can be integrated into other cross- functional systems and thereby provide accounting and productio n information to customers when they want it.

2.5Key CRM principles

2.5.1 Differentiate Customers

All customers are not equal; recognize and reward best customers disproportionately. Understanding each customer becomes particularly important.

What CRM needs to understand while differentiating customers is:

- Sensitivities, Tastes, Preferences and Personalities

- Lifestyle and age

- Culture Background and education

- Physical and psychological characteristics


Differentiating Offerings

Low value customer requiring high value customer offerings.

Low value customer with potential to become high value in near future.

High value customer requiring high value service.


Keeping Existing Customers

Grading customers from very satisfied to very disappoint should help the organization in improving its customer satisfaction levels and scores. As the satisfaction level for each customer improves, so shall the customer retention with the organization.

2.5.4 Maximizing Life time value

Exploit up -selling and cross- selling potential. By identifying life stage and life event trigger points by customer, marketers can maximize share of purchase potential.

2.5.4 Increase Loyalty

Loyal customers are more profitable. Any company will like its mindshare status to improve from being a suspect to be ing an advocate. Company has to invest in terms of its product and service offerings to its customers.

2.6 CRM Programs

2.6.1 One-to-one Marketing

Meeting and satisfying each customer‘s need uniquely and individually. In the mass markets individualized information on customers is now possible at low costs due to the rapid development in the information technology and due to availability of scalable data warehouses and data mining products. By using online information and databases on individual customer interactions, marketers aim to fulfill the unique needs of each mass- market customer. Information on individual customers is utilized to develop frequency marketing, interactive marketing, and aftermarketing programs in order to develop relationship with high- yielding customers.

2.6.2 Continuity Marketing Programs

Take the shape of membership and loyalty card programs where customers are often rewarded for their member and loyalty relationships with the marketers. The basic premise of continuity marketing programs is to retain customers and increase loyalty through long-term special services that has a potential to increase mutual value through learning about each other.

2.6.3 Partnering Programs

The third type of CRM programs is partnering relations hips between customer and marketers to serve end user needs. In the mass markets, two types of partnering programs are most common: co-branding and affinity partnering.

2.7 Architecture of CRM

There are three parts of application architecture of CRM:

Operational - automation to the basic business processes (marketing, sales, service)

Analytical - support to analyze customer behavior, implements business intelligence alike technology

Collaborative - ensures the contact with customers (phone, email, fax, web, sms, post, in person)

2.7.1 Operational CRM

Operational CRM means supporting the "front office" business processes, which include customer contact (sales, marketing and service). Operational CRM provides the following benefits:

Delivers personalized and efficient marketing, sales, and service through multi- channel collaboration.

Enables a 360-degree view of your customer while you are interacting with them.

Sales people and service engineers can access complete history of all customer interaction with your company, regardless of the touch point.

The operational part of CRM typically involves three general areas of business:

3 Sales force automation (SFA)- SFA tools are designed to improve field sales

productivity. Key infrastructure requirements of SFA are mobile synchronization and integrated product configuration.

4 Customer service and support (CSS) - CSS automates some service requests,

complaints, product returns, and information requests.

5 Enterprise marketing automation (EMA) - EMA provides information about the

business environment, including competitors, industry trends, and macro-environmental variables

2.7.2 Analytical CRM

In analytical CRM, data gathered within operational CRM and/or other sources are analyzed to segment customers or to ide ntify potential to enhance client relationship. Examples of Campaigns directed towards customers are:


Retention: Retaining customers who leave due to maturity or attrition.

Information: Providing timely and regular information to customers.

Modification: Altering details of the transactional nature of the customers' relationship.

Cross- sell, up- sell

Analysis of Customer data may relate to one or more of the following analyses:

Contact channel optimization, Contact Optimization, Customer Acquisition / Reactivation / Retention, Customer Segmentation, Customer Satisfaction Measurement / Increase, Sales Coverage Optimization, Fraud Detection and analysis, Financial Forecasts, Pricing Optimization, Product Development, Program Evaluation, Risk Assessment and Management

Data collection and analysis is viewed as a continuing and iterative process. Therefore, most successful analytical CRM projects take advantage of a data warehouse to provide suitable data.

2.7.3 Collaborative CRM

Collaborative CRM facilitates interactions with customers through all channels (personal, letter, fax, phone, web, e-mail) and supports co-ordination of employee teams and channels. It is a solution that brings people, processes and data together so companies can better se rve and retain their customers. The data/activities can be structured, unstructured, conversational and/or transactional in nature. Collaborative CRM provides the following benefits:

Enables efficient productive customer interactions across all communications channels

Enables web collaboration to reduce customer service costs

Integrates call centers enabling multi-channel personal customer interaction

Integrates view of the customer while interaction at the transaction level

2.8 Tools Needed for CRM

2.8.1 Customer database

A good customer information system should consist of a regular flow of information,

systematic collection of information that is properly evaluated and compared against different points in time, and it has sufficient depth to understa nd the customer and accurately anticipate their behavioral patterns in future. The customer database helps the company to plan, implement, and monitor customer contact. Customer relationships are increasingly sustained

by information systems. Companies are increasingly adding data from a variety of sources to

their databases. Customer data strategy should focus on processes to manage customer acquisition, retention, and development.

2.8.2Data Mining for CRM: Some Relevant issues Data mining is an important enabler for CRM. Advances in data storage and processing technologies have made it possible today to store very large amounts of data in what are called data warehouses and then use data mining tools to extract relevant information. Data mining helps in t he process of understanding a customer by providing the necessary information and facilitates informed decision- making.


What is retailing?

Retailing is the business activity that involves selling products/services to custo mers for their

non- commercial, individual or family use. Normally, retailing is the final stage of the

distribution process.

CRM (Customer Relationship Management) in retailing aids to increase efficiency, serves to

aid the sales unit in all of its efforts, manages to boost sales, and fundamentally contributes to

the overall development of the business. It also manages to work towards organizational

goals. This is achieved through a concise study of potential customers.

Their preferences are taken into consideration and used to coordinate and implement a

customer centric business strategy that focuses primarily on the customer, yields to recording

the importance of his ideas and suggestions and results in increased customer retention.


Necessity of CRM in retailing

Retailer use CRM concept to the following reasons that I mainly found from my


To know their customers‘ needs and wants in c ustomized way.(Shopkeepers put in

mind what their loyal customer seek from them and what are the tastes and

preferences of a particular customer)

To deliver the desired products quickly in the hands of their customer (call the

customer when a desired prod uct reached in shop or sometimes send it to customers)

I also found when any new products or design come in shop retailers inform it to

specific customer, sometimes they inform customer about if any products price falls

or any discount is available (for promotional activities)

By applying CRM concept a retailer can know who most profitable customer and who

is less profitable and thus can maintain relation with those who provides best value.

By continuously maintaining communication with customer retailer ca n know their

changing demands and can bring the innovative products.

3.2 How retailer benefited by CRM

If a retailer becomes able to maintain strong relationship with customer then it generate a numbers of benefit for them which includes:-

Retailer can generate maximum sales by repetitive purchase of loyal customer.

By uniquely delivering the desired products they can best meet the needs and requirements of their customer.

Greater sales ensure maximum profit level.

Whenever loyal customer frequently visit the store that time retailer can infirm them about other additional products and sell it (cross-selling).

By applying CRM concept retailer can ensure customer satisfaction which then leads to positive word of mouth communication and thus retailer reputation and new customer base increase.

By using CRM concept retailer can protect customer in competition( loyal customer stay close to retailer even if they don‘t get appropriate products or service because of relation)

3.3 Top satisfaction drivers for building strong relationships in Retailing

In order to satisfy a customer and retain them longer time a retailer must need to know what customer are seeking from retailer. What drives for their satisfaction? I analyzed following factors that a customer always emphasize:-

Person-to-person experience the store has helpful, friendly, knowledgeable employees who anticipate customer needs and exceed customer expectations.

Store experience the store is cleaned, well- designed, organized, adequately stoc ked with quality merchandise and provides "fun" experiences.

Price and value the price that customers pay for goods is matched by the perceived value that they receive for making the purchase.

Marketing and communications the store's promotions are well-communicated, easy to redeem and valuable to customers.

Data integration and analytics the store provides the same product selection and product Information across all sales channels, and uses information from a consumer's past purchases to provide better service.

To build enduring customer relationships, retailers also need to provide shopping experiences that are consistent with consumer desires and expectations. Things that are needed to ensure shopping experience are:-

Ease-of -use Shopping is hassle- free; the retailer makes the customer feel welcome; the retailer meets all customer expectations.

Strong association Retailer is top-of-mind; the customer feels good recommending the retailer to family and friends; the customer fee ls that the retailer provides the best value compared to competitors.

Self-esteem Shopping gives the customer a sense of familiarity; the customer believes shopping reflects their good judgment; shopping makes the customer feel like they "fit in."

Price relationship The customer enjoys taking advantage of special offers and low prices.

3.4 Process of CRM in retailing

CRM is an iterative process that turns customer data into customer loyalty through different types of activities. Levy and Weitz described CRM in retailing through a systematic process-

described CRM in retailing through a systematic process- I analyzed the retail market and CRM in

I analyzed the retail market and CRM in retailing (clothing business).This report is described on the basis of this model. I tried to describe the applied CRM in retailing business.

The process of CRM in retailing is thus described below sequentially-

3.5 Collecting customer data

The first step of CRM is constructing a customer database. This database is referred to as a customer data warehouse, contains all the information the firm has collected about its customers and is the foundation for subsequent CRM activities.

3.5.1 Customer Database

Ideally the database contains the following information:

Histories of purchases-retailer keep the information of the purchases made by particular customer. This information helps retailer to know about customer.

Customer contact-I found that almost every retailer keep the information of customer in order to make future communication. Usually retailers seek customer address and phone numbers.

Customer preferences-retailer keeps information of customer preferences and choices. From my study I found that retailer keep enough information about customer selection of cloths, the regional preferences of cloths, information of customer preferences of quality and design. Based on these preferences retailers often contact with customer whenever a new design or changing pattern comes in market.

3.5.2 Approaches for collecting information

Asking for information-In general I saw retailer ask customer to provide their address and contact number whenever they make purchase.

Using frequent shopper card and credit card information-This is often used by branded retail chain store to collect information whenever a customer enroll in a loyalty program by giving descriptive information about him or retailer collect information from credit card transaction used by customer. Though I have not found any retailers use these types of collecting information in my territory.

3.6 Analyzing customer data and Identifying target customers

This is second step of CRM process in retailing. By analyzing customer database and using the information retailers develop programs for building customer loyalty.

Following are the techniques retailer use to analyze customer-

3.6.1 Data mining

Data mining is the technique that retailer use to understand their customer buying pattern and helps them for decision making.

I found many retailers use their large data wareho use to put enough information about

customer then use data mining technique to extract the relevant information which is valuable

to serve specific customer.

3.6.2 Market basket analysis

Market basket analysis is a specific type of data analysis that focuses on composition of basket or products purchased by a customer during a shopping occasion.

I observed that all retailer follow what item customer usually buy in a shopping and they do so to arrange their merchandize in a way so that customer find their desired products when they next time come in purchase.

3.6.3 Identifying market segments

Customer data analysis is also essential for market segmenting. I observed that retailer on the basis of data mining and basket analysis makes a perception about customer purchase. It then helps retailer to adopt specific policy for satisfying group of customer needs who purchase similar merchandize

3.6.4 Identifying best Customers

Using information in the customer database retailers can develop a score or numbers indicating how valuable they are to them. Best customers are determined by- Lifetime value

Lifetime value is the expected contribution from the customer to the retailer‘s profits over his or her entire relationship with retailer.

Most of the retailer responded to me that they estimate lifetime value by analyzing customer past purchase, gross margin from these purchases and costs they spend to get this customer. Costs include their advertising and promotional efforts to acquire customer.

By analyzing LTV retailer believes that a customer who make the purchase pattern in past will continue same pattern in future. Customer pyramid

A commonly used segmentation of customer is using pyramid approach. Which is shown


customer is using pyramid approach. Which is shown below:- This scheme allows retailers to develop more

This scheme allows retailers to develop more appropriate strategies for each group of the segments.

Platinum segments-I asked retailers about their platinum customers. They responded they regard platinum customer those who make their most purchase and liable for greater profit. They treat these customers with much care and exclusive service. Platinum customer also become loyal to customer and become less price sensitive because of good relation. Retailer often refers their ―key customer as Platinum‖

Gold-They are not as loyal as platinum. Though they make significant purchase from retailer but they are price sensitive and so they visits many store. I observed this type of customer who actually can‘t fully rely on a particular retailer rather they seek for suitable offerings from competitors. Some of them directly blame close retailers if they get fewer prices to other.

Iron- They have modest LTV to retailer so much attention is not given to this category. I see retailer provide value if purchase is made and try to motivate for repurchase.

Lead-They are irritating customers who actually do not purchase but go shop to show merchandize. I saw many customers of this category in my clothing business. RFM (Recency, Frequency, Monetary) Analysis

Recency refers how recent a purchase is made. Frequency means how frequent customer purchases and monetary refers how much they have bought.

I observed from my research retailer give priority to those customers who make frequent purchase or purchase in greater volume than those who comes seasonally and less frequently. Retailers also weight value based on these criteria.

3.7 Developing CRM programs

In this section I would like to describe the strategies or programs retailers use to maintain CRM in retailing.

3.7.1 Retaining the best customer (customer retention)

Following are the strategies that I found retailer use to reta in their best customer:-

Providing incentives or discounts-most of the retailer I found offer discounted price or incentives to their loyal customer. During my observation I saw many customers come from long distance to get incentives on their purchases.

Special customer service-Retailers provide unusual high quality service to retain their best customers. I saw retailers offer drinks, tea or foods to greet their loyal customers. Other service includes quick complain solving, keep or replacing returned item, assigning special salesperson to serve loyal customer etc.

Personalization-By using information collected about customer retailers now can meet the customer needs uniquely and in customized way. I saw most of retailer keep some items for only loyal customer. Sometimes retailer keeps order with desired requirements and then serves those products to satisfy their unique needs. In clothing business this strategy highly applied.

Informal communications-I seen this policy highly applied by clothing retailer. They often talk informally with loyal customers and keep relationships alive.

3.7.2 Converting good customers into best customers

I previously highlighted about customer pyramid .By this strategy retailers try to convert good and iron into platinum. Retailer follows two approaches to do this-

Cross selling selling a complementary product in a specific transaction. I saw some retailers urges for purchasing a tie when a customer buy a shirt. Some other pursues to sell perfumes and apparels with the main products.

Add-on selling-By this approach a retailer try to sell additional products with main products. Many retailer I seen try to pursue customer to sell new products and latest offering or arrangements with the traditional products.

3.7.3 Dealing with unprofitable customer

All customers are not equally profitable. Some customers always create problem. The return of sold product, complaining unnecessarily, demands for most costly activities are problem created by such customers. I asked retailer how the y manage these unprofitable customers, they replied:-

We offer less services and efforts to meet the needs of these customers.

Seek price for costly services and do not provide discounted price or promotions as to deduct them.

3.8 Implementing CRM process in retailing

The implementation of a customer relationship management (CRM) solution is best treated as a six-stage process, moving from collecting information about your customers and processing it to using that information to improve mark eting and the customer experience. I here would like to describe how retailers (in clothing business) actually go through these steps when they implement CRM in their business:

Stage one - Collecting information

As I discussed earlier that every retailers need to have a customer database where they keep necessary information about customer. I saw retailer mainly use these information to categorize and segment the customer with different needs and requirements.

Stage two - Storing information

Only collecting information is not enough to implement CRM. From my study I saw retailer keep the customer information for longer time in order to communicate in future. Whenever any address or contact number is changed it requires to update promptly.

Stage three - Accessing information

Accessing information means using information to make connection. Most of the retailer call to their customer and provide information about their products even it is not asked by customer.

Stage four - Analyzing customer behavior

All customers not seek same service. I observed customer needs and requirements are different and the reasons for choosing retailer also differ across their perception. Retailers actually analyze these diverse customers by using data mining or by dealing longer time.

Stage five - Marketing more effectively

Marketing effectively to inform and pursue customer is another step of retailer to manage customers‘ relationship, I observed retailer continuously inform their loyal customer base whenever any new trends comes or if they offer any promotional package.

Stage six - Enhancing the customer experience

Enhancing customer experience is required to manage customer problems quickly. Most of experienced retailer I seen having the ability to understand customer through a single look. These retailers can easily handle when any complain arises.

3.8.1 Critical Success Factors for Implementation of CRM in retailing

Critical success factors are those elements which responsible for successfully implementing the CRM in retailing. The key CSF for CRM in retailing are:

Collaborative efforts-A successful CRM requires close coordination from all

departments. A retailer needs to manage all the employees such as sales team, media, and

finance authority coordination.

Sufficient Resources

In successful retailing a retailer must have clever and experienced personnel, good physical evidence, and sufficient stock. I saw customer switch to other retailer if the shop have lack of decoration, insufficient inventory or fewer assortments

Clearly Defined Objective

There must be a promise to ensure CRM. Retailer often set specific objectives and then act to achieve these objectives.

Managing Change

Products of retailers change time to time. Especially in clothing business I saw changing of design and price are in a dramatic way. So retailers must need to cope with these changes to service customer better.

3.8.2 Reasons for CRM Implementation Failure in retailing

An understanding of the challenges and critical success factors is paramount to CRM success. The main reason for CRM failures in retailing includes :

Customer focus

Many retailers have lace of customer focus. Rather than emphasizing on customer I found many of retailers just rely on selling products and generating profits.

Weak Management

In retailing most of shopper have lack of training on CRM, lack of CRM understanding, lack of communications and changing business trends analysis.

CRM Project Management

There is misalignment between CRM project and business requirements, with unrealistic goals, timelines, coupled with a lack of planning and insufficient reporting and control.

Team Members

There is lack of support, incentives, and lack of technical knowledge among salesperson to satisfy customer needs.

Data & Warehouse Requirements

Most of retailers have poor quality data, inconsistent data warehousing system and lacking of updating data timely.

CRM in retail is failing because the correct capabilities are not being built at the enterprise level. The requisite changes in retailer culture, behavior and attitude are not being implemented properly to ensure CRM in retailing.

3.8.3 Suggestions for successful CRM implementation in Retailing

There should be more and more emphasis given by the retailer for satisfying the customer up to a apex limit and by providing the util ity of every penny of money a customer spend to buy it.

There should be more use of information technology to collect information timely.

The retailer should be flexible to bend its rules and procedures in the customers favor. If any customer intention is assumed for not buying than manage him cordially rather showing negligence.

The retailer needs to focus on informal relationships and communications with customers.

Retailers need to develop training programs to understand CRM process and serve customer better.

Retailer must need to know what the drivers for customer satisfaction and dissatisfaction are.

All the employees must need to cooperate with each other for the success of CRM.

3.9 Conclusion

CRM is basically the collection and distribution of ―all‖ data to ―all‖ areas of business. The data can then help market the company, help up sell to existing customer, understand customers better so that customers can be given better service and allows them to interact with the retailer by whatever means they wish. Customer Relationships are achieved by the retailer working together to give customers what they really want. CRM is a business strategy to create and sustain long-term, profitable customer relationships. By ensuring effective CRM process in retail store a retailer not only benefitted by greater sales and profitability but also can build a strong store image relative to competitor.

3.10 References

1. Michael Levy, and Barton A Weitz. (2003), “Retailing Management (5 th Edition)”, New Delhi: Tata McGraw-Hill.Ch-11, pp.335-360

2. Daffy, C. (1999), "Once a customer, always a customer", New Delhi: HarperCollins.

3. Liljander, V. and Roos I. (2002), "Customer relationship levels: From spurious to true relationships",

Journal of Services Marketing, Vol. 16 No.7, pp. 593-614.

4. - Retrieved on 5th February 2011 at 9.35 p. m

5. on 4th February 2011 at 10.55 p. m

About this questionnaire

Dear Sir, This is Jakaria Ahmed, a student of MBA, Leading University, Sylhet. I am at the end of my

study but to fully complete my MBA I need to submit a project report. My project report is based on Customer relationship management in retailing (clothing business).For this purpose

I have came in field to collect data and analyze practical situation.

I hereby come to you with a questionnaire. I hope you will be kind enough to cooperate with

me to complete my study.

I assure you that no data will be disclosed to third party without your prior permission. In

addition, this report may help you to effectively use CRM concept in your store.

With best regards

Dewan Jakaria Ahmed


MBA, Dept of Business Administration Leading University


Questionnaire for CRM in Retailing

1. Have you ever heard about Customer relationship Management concept?

a) Yes

b) No

2. From you viewpoint how you define CRM?


3. Are your customer‘s needs clearly defined?

a) Yes

b) No

4. Do you have any customer database for collecting data about customer?





5. What type of information do you keep in your database?


6. How you classify of segment your customer?


7. How you determine your best customer?


8. What are the CRM programs you have?


9. Do you conduct customer satisfaction surveys?

a) Yes

b) No

10. Do you communicate results of your customer satisfaction surveys regularly throughout the company?

a) Yes




Do you actively seek out customer comments and complaints?

a) Yes

b) No


How do you get customer comments and complaints?

a) Face to face interview.

b) Toll free numbers, formal surveys.

c) Others means


How do you get information about the customers?

a) Face to face interviews

b) Surveys.

c) Any other means.


Do you give concessions to your regular cus tomer?

a) Yes

b) No


Do you take feedback from your customers?

a) Yes

b) No


Do you customize your product or services according to the customer?

a) Yes

b) No


Do you have a concept of ―internal service‖?

a) Yes.

b) No.


Do you communicate with your customers frequently?

a) Yes.

b) No.


Do you regularly review the business process to eliminate non value- adding activities

and improve customer satisfaction?

a) Yes

b) No.


Is the working environment is conducive to the well-being and morale of all employees?

a) Yes

b) No.

17. Is there commitment from top management to support the customer-focused service concept?

a) Yes

b) No

18. Is there any improvement in average sale per customer?

a) Yes

b) No

19. Is there any improvement in customer response rate to the marketing activities?

a) Yes

b) No

20. Is there any improvement in customer retention and loyalty?

a) Yes

21. What are your strategies to retain loyal customer?


20. How do you implement CRM in your retail outlet?


23. Do you consider any factors for success and failure of CRM? If Yes, then, what are


a) Yes

b) No

Respondents Name and Signature