“Analyzing the effectiveness of CRM in increasing the sales volume with special reference on Organized Retail Stores in Indore city”

Introduction

Today, we are moving away from transaction marketing towards relationship Management known as Customer Relationship Management. Relationship Management focuses on customer retention via customer satisfaction. Customers are most concerned about the value of the product or service that is offered rather than the price of the product. Firms are more focused on the post-sales activity in customer service for the long-term rather than the short-term as in transaction marketing. Firms communicate their product or service to their customers via customized marketing efforts

The retail industry is divided into organized and unorganized sectors. Organized retailing refers to trading activities undertaken by licensed retailers, that is, those who are registered for sales tax, income tax, etc. These include the corporate-backed hypermarkets and retail chains, and also the privately owned large retail businesses. Unorganised retailing, on the other hand, refers to the traditional formats of low-cost retailing, for example, the local kirana shops, owner manned general stores, paan/beedi shops, convenience stores, hand cart and pavement vendors, etc.

As a sector, retail has been slow to adopt CRM principles and practices. Compared with such industries as financial services and telecom, retail appears downright sluggish. The early CRM experiments at retail focused on store-based efforts like branded credit cards and frequent-shopper programs, some of which have taken root and been extended year after year. There are pockets of CRM success in retail, observes Adam Sarner, CRM analyst at Gartner Group. "We are seeing some interesting programs in email marketing, in customer service, and in customer segmentation."

At the high end of the retail sector, several creative new CRM strategies have emerged. And experiments with "clienteling," which means automating (computerization) the "black book" traditionally maintained by store sales personnel on their own customers, containing purchase history, preferences and contact information. Sales people will be able to pull up customer profiles and email their best customers about upcoming events like trunk shows or the arrival of

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new merchandise. "This is the 'last mile' of CRM," says Gartner's Sarner. "It supercharges the sales person's ability to manage the existing relationship."

Over the years there have evolved a handful of distinct approaches, none of them are perfect: Store cards, whether a branded credit card or a discount or loyalty card. Only a fraction of customers will use the card, and even then, usage can be sporadic.

The Indian Retail Scene

There is no doubt that the Indian retail scene is booming. A number of large corporate houses — Tata’s, Raheja’s, Piramals’s, Goenka’s — have already made their foray into this arena, with beauty and health stores, supermarkets, self-service music stores, every-day-low-price stores, computers and peripherals stores, office equipment stores and home/building construction stores. Every retail category has been attacked, by the organized players today.

Headlining stories from the convention and the figures posited by Reliance Retail president / CEO Raghu Pillai showing that organized retail business in India is set to grow from 10 percent of the country’s GDP to as much as 25 per cent within the next five years. Maureen Johnson of communication services group WPP’s retail consultancy, The Store, meanwhile called customer relationship management crucial and that “CRM has been key…it is very powerful” in the rise of organized retail in India.

Indian Retail Industry is ranked among the ten largest retail markets in the world. The attitudinal shift of the Indian consumer in terms of "Choice Preference", "Value for Money" and the emergence of organized retail formats have transformed the face of Retailing in India. The Indian retail industry is currently estimated to be a US$ 200 billion industry and organized Retailing comprises of 3 per cent (or) US$6.4 Billion of the retail industry. With a growth over 20 percent per annum over the last 5 years, organized retailing is projected to reach US$ 23 Billion by 2010.

CRM in Sales-Relationship is Capital

For sales, CRM is an especially important research domain. As a strategy, organizations pursue CRM for a variety of reasons, including information sharing

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between departments to improve customer service or simply to stay abreast of the competition. Hence, the sales force benefits from an increased speed of response, greater internal synergy in serving the customer, better value-adding service, and cost savings. Indeed, the greatest benefit of a CRM strategy may be the information available for increasing the coordination of various customer service functions. A secondary benefit of an organization wide CRM strategy is the opportunity for salespeople to sell more efficiently by increasing quality selling time, and more effectively, through having better and more timely customer information.

CRM helps companies make sense of customer needs and helps companies manage these relationships more intelligently and help predict the future. Such knowledge provides a crucial competitive differentiation for companies to gain market share and reduce operational costs with retaining their customers.

On the other hand the generally accepted purpose of CRM is to enable sales organization to better serve its customer through the introduction of reliable processes and for interaction with those customers.

In today's environment, retail companies need to practice customer relationship marketing to gain a competitive edge. This is feasible if CRM becomes an integrated part of the marketing management paradigm.

The retailer must identify the characteristics and needs of consumers. The customer group that a retailer seeks to attract and satisfy is called the target market. In selecting its target market, a retailer may use one of the three techniques: selling goods and services to broad spectrum of consumers, the mass market; zeroing in on one specific group, a market segment; or aiming at two or more distinct consumer groups, multiple segments.

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Literature Review

The goal of this review is to identify research and articles published over the past ten years related to CRM with relevance to sales management. The ten-year time frame was chosen because it encapsulates the rise to prominence of CRM and much of the technology that aids in implementation of CRM concepts. The review includes both empirical studies and conceptual articles.

Fournier, Dobscha, and Mick 1998; Day (2000). Utilizing a case analysis, espouses that by properly implementing information technology throughout an organization, effective relationship management can become an organizational capability.

Clemons (2000) says that a tiny proportion of a company's customers will generate the bulk of its profits. Identifying, collecting and keeping these clients is the very essence of customer relationship management.

Leigh and Marshall (2001) highlights that the sales function will increasingly be viewed as the firm's means of "partnering" with customers. This redefines the sales function whereby strategic account management will be the objective, which will require CRM-related processes and technologies such as lifetime customer value analysis. Ingram, LaForge, and Leigh (2001) specifically call for research on this aspect of CRM.

Parthenios and Amalia (2001) focuses on what keeps a good customer coming back is good service and today’s economic climate demands more than ever that customer acquisition, profitability, and retention remain central to an organization’s business. But that cannot be done if customers are running out the door before organizations even discover who they were or, more important, what they potentially were. To keep them in the store, organizations need to offer a better customer experience and they are turning to CRM applications and processes to do just that.

As Leigh and Marshall (2001) note, insights into information acquisition and management will be important to understanding CRM as a business process. Beyond simply gathering important customer data, salespeople and sales

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management should be involved in CRM analytics--that is, the design, creation, and maintenance of CRM systems. They should help initiate new CRM processes and technologies, because they are experts in the types of information needed to enhance the performance of their sales role.

Anderson (1996); Ingram, LaForge, and Leigh (2002); Leigh and Marshall (2001). Further, each stresses the effect that CRM-related strategies and technologies will have on the sales organization. Anderson (1996) recognizes that SFA and electronic sales channels dramatically reshape not only the role of the salesperson but the role of personal selling within the firm. While not couching such trends in terms of CRM, Anderson's (1996) "blending of sales and marketing" notion closely parallels the relationship management activities prevalent in CRM. Sales force roles that are touted as irreplaceable by advanced technology include anticipating new customer needs and developing long-term strategies in partnership with customers.

Moreover, as Widmier, Jackson, and McCabe (2002) suggest, some of the most useful technology is likely to be initiated by salespeople, and managers should examine those instances to aid in the redesign of the sales force. In sum, salespeople are useful (1) for gathering important data, because of their boundary-spanning role; (2) in identifying the types of data that should be collected and how that data translates into useful customer information based on their sales experience; and (3) for suggesting how that information should be utilized in CRM by aiding in the design of supportive CRM systems. Hence, the sales role may become increasingly intertwined with the information system manager and data analyst roles. Thus, as customer experts, salespeople could become valuable to the firm by providing insights for planning activities such as new product development, product forecasting and supply-chain management, and financial planning and resource allocation.

Romano, (2003) brings out that moreover, in recent years, CRM’s potential to contain and reduce cost has been explored. CRM, in concert with other processes, can help reduce churn or turnover in an organization’s customer base. Better customer management can result in lower sales and service costs, higher buyer retention, and lower customer replacement expenditures.

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Badrinarayanan, Vishag (2005) suggests that the use of Customer Satisfaction teams is likely to continue into the future (Macy forthcoming). By examining their ability to enhance the development of a knowledge management competence and a relationship marketing competence, our study explicates further their value to the firm. As the demands placed on selling organizations increase in the future, more firms will embrace customer-needs--driven CRM strategies; firms that understand the role that CS teams play in these strategies will have a competitive advantage over their rivals.

Charles W. Jaeger (May 2005) says that, in today's business environment companies cannot afford to lose a single profitable customer. By effectively leveraging results from a customer satisfaction survey an organization can respond to their customer's needs in ways that increase revenue as well as improve customer and employee, satisfaction and loyalty.

Tariq Mohiuddin Ahmed – (2005) says that CRM builds especially on the principles of relationship marketing; the formal study of which goes back 20 years. CRM builds on the philosophy of relationship marketing. This emphasis on relationships, as opposed to transactions, is redefining how companies are interacting with their customers. Customer relationships have received considerable attention from both academicians and practitioners. The increasing emphasis of relationship marketing is based on the assumptions that building committed customer relationships results in greater satisfaction, loyalty, positive word of mouth, business referrals, references, and publicity. Intense competition for market share in today’s market requires managers to attend to customer retention and the how’s or whys of a patron returning and continuing to repurchase.

Tariq Mohiuddin Ahmed –(2005) again focus that to survive in the global market, focusing on the customer is becoming a key factor for companies big and small. It is known that it takes up to five times more money to acquire a new customer than to get an existing customer to make a new purchase. A Second aspect of CRM is that knowing the customer and his /her problem allows to acquire new customers more easily and facilitates targeted cross-selling.

Prof Arun Saxena in his research paper CRM in service sector (2006) today’s customer is empowered by information and choice. This presents new challenges to companies, who in their quest to acquire retain and service customers are

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adopting CRM in a big way, and changing their business approach from being ‘product centric’ to ‘customer centric’. The role of CRM is to provide a wide range of touch-points through which a customer can interact with the company. The objective of this paper is to explore the efficiency and effectiveness of CRM in the service sectors, (with special reference on), which calls for a more personalized service than ever before.

Joseph Gagnon, Global Leader of IBM's retail consulting practice. (2006) in his article says that Consumers are clearly telling retailers that they want a personalized and interactive shopping experience. They want immediate access to promotions based on past purchases and loyalty, as well as precise details on product availability or items that are out-of-stock. They also want helpful sales associates, fast service and a store that is easy to shop, sometimes even more than they want low prices,"

Bob Thompson, founder of CRMguru.com (2007) says that relationship management (CRM) is a business strategy to select 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".           

Paul Christ, (January 2007) The lesson for marketers is that even some of the largest companies that have a lot of money to invest in making sure customers are happy have a long way to go before the goals of CRM are achieved. ”The lesson for marketers is that even some of the largest companies that have a lot of money to invest in making sure customers are happy have a long way to go before the goals of CRM are achieved. Marketers should also remember that customer service can be an important component in the “features” offered by a company and those negative experiences a customer may have with customer service may affect a customer’s perception of the value they are getting from their relationship with a company.  When CRM is done right it not only can boost customers’ perception of the value they are receiving it can also help stimulate additional purchasing.  And, of course, customer service done wrong can have the opposite effect.

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Tim Fargo (CRM project) A sales force or customer service system can identify high-value customers to sales and service forces so these customers will benefit from individualized retention activities.

Conrad Chang (2007) it is still all about the customer. At the end of the day, the end-to-end solutions need to satisfy what really matters – the customer. It is vital that enterprises know their corporate objectives and directions and invest accordingly in the relevant CRM solutions that match their needs. Enterprises in fast growing and niche areas would require a different set of solutions than those that serve mature and slow-growing markets.

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Rationale of the study

All companies are facing massive challenges in today’s highly competitive market and strive to acquire the maximum possible market share in an overcrowded market. There are certain threats which companies are facing such as:

The nature of competition which is going global. The rate of change is accelerating out of control. Margins are being eroded. Customers are becoming more demanding and getting less loyal Customer churn is increasing. Product life cycles are decreasing. Industry barriers are collapsing, major brands entering new markets. The internet is transforming the business landscape.

are compelling for a designing of CRM Solutions and comprehensive strategies by integrating people, process and technology to maximize relationships with all customers.

The field of customer relationship marketing can be viewed as a sub-area of “market focused management.”At the most simple level, CRM strategy prescribes that it is more effective to invest in long-term customer interactions than to rely on a series of potentially unrelated, one-time exchanges. In practice, however, CRM is not that simple to implement. There are multiple stakeholders to consider, and organizations must make certain that value is provided for all members of a potential partnership. Here, we consider several strands of relationship marketing, including the concepts of: customer relationship management, stakeholder theory, affinity marketing, promotional incentives, strategy, and leadership.

Although many researchers have been conducted worldwide regarding CRM in Organized retail sector, still looking at the dimensions of the Indian market, CRM stands to be the survival mantra. For sales, CRM is an especially important research domain. As a strategy, organizations pursue CRM for a variety of reasons, including information sharing between departments to improve customer service or simply to stay abreast of the competition.

Managing customer relationship effectively and effectively boots customer satisfaction and retention rates. Organizations have discovered and research studies have shown that retaining current customers is much less expensive than

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attempting to attract new ones. Companies have come to realize that in order to develop successful long-term, relationship with customers they should focus on the “economically valuable” customer, while keeping away and eliminating the “economically invaluable” ones. Proper CRM practices can potentially impact customer satisfaction rating and can potentially lead to increase customer retention.

This study responds by underscoring the criticality of performing a deep analysis of a firm's readiness to undertake a CRM initiative. This assessment provide detailed answers to the questions like: What is a firm's current CRM capability? And what changes must be in place embarking on a CRM initiative, for increment in the sales volume?

The purpose of this thesis is study of Customer Relationship Management process in Customer Satisfaction and sales increment. We describe the objectives of Customer Relationship Management (CRM) in sales increment, which is very important for the survival of companies in today competitive environment.

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Research Objectives

From the problem discussion above, the purpose of this study is to explore the impact of Customer Relationship Management in increasing the sales volume of organized retail stores. In order to reach our purpose the following research question is stated:

To study the conceptual framework of CRM in Organized retail stores. To analyze the effectiveness of CRM in improving target market effectiveness

of seasonal programs and promotions. To study the impact of CRM in increasing the revenue per customer visit, and

the number of visits by customer. To examine the impact of CRM in sales forecasting and understanding the

share of market. To study the effect of CRM on cross selling and up selling opportunities To identify the effectiveness of CRM on customer satisfaction and retention. To understand the techniques that can be used to build strong word-of-mouth

or referral (or pass along) campaigns for finding new customers through CRM.

To explore the potential challenges imposed by factors in effective implementation of globalized campaign s to manage Customer relations.

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Research Methodology

Type of Research: Descriptive Research The major objective with a descriptive research is to describe something, such as a population or phenomena. It seeks to answer who, what, where, and how questions. Consequently, a descriptive research doesn’t give the answer to why questions, in other words, it doesn’t give the explanation of the cause of the findings.

The Sample Profile During the sample design process the target population is identified, as well as the sampling frame, sampling technique, and the size of the sample.

Sample Element: All organized retail stores in Indore City.

The Population: All managers and sales executives of Organized Retail stores In indoor city.

Sampling Frame: The sampling frame for this study are the managers of organized retail stores in Indore City .The sampling frame also includes all customer feedback records.

The Techniques: In this study, the non probability Convenience sampling technique wills be used.

Sample Size: Around 300 managers and sales executives will be selected for the study.

Data Collection: to collect the Primary data a structures questionnaire using a five-likert point scale will be developed including all dimensions above.

For Secondary data will be collected from various sources like Books , Internet , Statistical handbooks , Experts , periodicals , journals , research publications etc .

Data Analyses: to achieve the objectives of our study and testing of the hypothesis ANOVA (Analyses of Variance) to study the cause and effect of CRM on sales and other factors and CHI Square test will be used to statically prove the type of association between the above two .

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Hypothesis

There exists a positive impact of Customer Relationship Management process

in increasing the sales volume.

There exists a positive effect of CRM in increasing the number of customer.

There exist a positive effect of CRM on customer satisfaction and retention.

There is no significant difference between the companies with and without

CRM in terms of sales.

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