Selecting a retail CRM system: Must-read guide

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This comprehensive guide will help retailers properly assess and evaluate retail CRM systems to select the best solution for their business needs.

Most CRM Systems Don't Meet Retail Needs

Why Many CRM Systems Don't Meet Retail Needs

1. Most CRM systems are focused on B2B use cases

Many CRM systems are not designed to handle B2C use cases such as tracking individual purchase histories, householding individuals (to identify buyer v/s head of family, etc.), tracking transactions from point of sale system / ecommerce platform / partner sites, handling coupons, etc. In a retail business, tracking these are extremely important as the marketing segmentation are based on these parameters.

2. Loyalty engine is usually NOT built in CRM systems

Loyalty programs can increase customer lifetime value (CLTV) by 30%, if not more. It's due to this reason that loyalty platforms are gaining prominence. While many loyalty platforms are not true CRM platforms, only a few CRM systems are starting to provide capabilities to manage customer loyalty. Integrating loyalty membership, points management, incentives, redemption & core CRM capabilities into a single platform is very critical for retail to stand out from competition.

3. Point of Sale - CRM integration is an after-thought

Retail customer information is typically captured via Point of Sale, eCommerce site or mobile application. Not many CRM systems have out of the box integrations with these systems. Significant effort goes into building data integrations across various systems to make CRM platforms useful. Additionally, data flow between systems need to be painstakingly managed if the right CRM is not chosen.

4. Real-time Customer 360º view is unavailable

Many CRM platforms do not support a true 360º view of the customer, especially real-time information. Customer behavior (on website, mobile apps, social media, etc.) can be very valuable to understand customer preferences and make real-time decisions (by the call center reps). This level of details requires the CRM to be able to support structured, unstructured and streaming data, which many CRM platforms do not support.

5. Data Hygiene in CRM is usually a nightmare

Due to lack of data hygiene capabilities within many CRMs, when a customer engages with a company through the different channels, the CRM may create multiple profiles for the same customer. The ability to perform data cleansing, enrichment & deduplication if not well planned, can be a nightmare for retailers.

Vendors use Many Confusing Terms to Describe their Products

Customer Relationship Management (CRM).

CRMs can provide 180-degree (transactional) view of the customer.
Watch out: Many CRMs are B2B focused & are not built for B2C use cases.

Customer Data Platforms (CDP)

CDPs can be used in real-time & provides 360-degree (transactional & engagement data) view for known & anonymous audience.
Watch out: CDPs are HOT right now & many vendors call themselves as CDPs just to be part of CDP RFPs.

Data Management Platform (DMP).

DMPs store 3rd party customer data & is useful to segment customers.
Watch out: DMPs typically don't store transactional data. Also, DMP data is owned by vendor, not you.

Customer Loyalty Management.

Loyalty engines enable businesses to run dynamic campaigns, issue & manage points real-time.
Watch out: Very few loyalty vendors have true CRM capabilities.

Identity Management Solution.

These systems integrate identities of customer from various systems together.
Watch out: They don't hold transactional data & don't provide detailed segmentation capabilities.

Data Warehouse & Data Lakes.

Data Lake can store any type of customer data (structured & nonstructured) & can be processed / presented as needed.
Watch out: Customizable, but requires lot of technical development effort.

Comparing Various Systems – Clarifying the Confusion

Comparison between a CDP system, CRM system, DMP system, Loyalty Engine & Data Warehouse.

Business Case For A Retail CRM

Measuring ROI from CRM Investments

Increase in Revenue via Campaigns

Increased revenue via better segmentation, targeting & personalization campaigns through email, web, mobile, etc.

A horizontal bar graph with sample data showing the increase in revenue via campaigns.

Savings from Increased Productivity

Reduced time (or head count) on data collection, data generation, report reviews, etc.

A horizontal bar graph with sample data showing the savings from increased productivity.

Increase in Revenue via Store Sales

Increased revenue via access to relevant customer data to store salesmen.

A horizontal bar graph with sample data showing the increase in revenue via store sales.

Savings from Systems Replaced

Reduced cost of recurring licenses / support costs for managing existing systems that get replaced by CRM.

A horizontal bar graph with sample data showing the savings from systems replaced.

Increase in Revenue via Customer Support Sales

Increased revenue due to product recommendations during customer support calls.

A horizontal bar graph with sample data showing the increase in revenue via customer support sales.

Savings from Errors & Reconciliations

Reduced time (or head count) on data reconciliations, order reshipments & other errors.

A horizontal bar graph with sample data showing the savings from errors and reconciliations.


Potential Revenue Increase & $32m Cost Savings from Retail CRM

Performing Current State Assessment

Why Perform Current State Assessment?

1. Identifying KPIs & Key Metrics

Although you may have KPIs defined already, this exercise will help leadership re-look at the KPIs they want to measure and track within the CRM system. Performing a quick competitive assessment can also align the business benchmarks with industry standards.

2. Understanding Current Realities, Complexities & Bottlenecks

Implementing a new CRM system is usually not as simple as it seems. Understanding current capabilities and limitations across existing technologies, processes and people is essential before undertaking such a gargantuan task. Comfort and reliance on legacy systems (technology debt), reluctance to upgrade due to system fragility and skill level of existing employees would mean that you document and educate the executives about the challenges before embarking a new CRM search.

3. Prioritizing Pain Points & Defining Project Scope

CRM implementations may take years to complete, especially if current pain points are not well prioritized and the project scope is not well defined. Prioritization allows you to phase out the implementation and target the quick wins early. This enables leadership to see the value out of the system and continue to invest more the system for more complex use cases.

Current State Assessment: 4 Key things to Catalog

1. Business Challenges and Goals

Involving leadership, key business stakeholders and primary users of the solution in this process can provide you many insights. Their business problems help justify why there's a need for a CRM platform that solves these challenges. Concrete goals from leadership team and business leads can be valuable to measure ROI from the CRM investments.

2. Current State System Architecture

Documenting and diagraming the current system architecture helps understand how the CRM solution will interact with the existing sources and systems. A strong understanding the data sources along with data & process flows will help in check if prospective CRMs can support them.

3. Technology, Data, & Resource Challenges and Limitations

Assessing the current technology and data challenges will help identify if there are certain limitations and challenges that the CRM system will need to work with. Additionally, team capabilities will help identify if there's a need to hire, replace or cross-train the CRM team.

4. Key Metrics

The current KPIs and key metrics may change with the implementation of a new CRM solution. They may not be in line with the company vision, creating little to no value for decision making. Assessing them will help determine how the new CRM solution can bring value to business.

4 key things to catalog during a Current State Assessment exercise.

Business Requirements For A Retail CRM

Identifying Business Requirements for a Retail CRM

Core CRM Requirements

  • Will the CRM be able to integrate with other retail tools and systems like a POS?
  • How well does it manage contacts, accounts, cases, and profiles?
  • Does it include robust marketing and automation functionalities?

Loyalty Needs

  • Will it manage memberships and levels of customer loyalty?
  • What offers should be pushed and to whom, when, and how?
  • Does it provide and support point management?

Analytics & Dashboard Needs

  • How can predictive analytics be used to maximize campaign usage?
  • How well does it utilize the data to provide the best insights?
  • How customizable is the reporting and dashboarding to align with business goals?

Segmentation & Campaign Capabilities

  • How can I segment and engage with the most valuable customers?
  • How do I upsell, cross-sell to targeted customers?
  • Does it provide automated and personalized campaigns?

Data Hygiene Capabilities

  • How well does the CRM handle data capture, deduplication & cleansing?
  • How will the CRM handle the same customer data from different systems/sources?
  • Will the data be available in real-time?

Non-functional Requirements

  • What type of users will be able to use the CRM and how easy will it be to use?
  • How secure and scalable is the CRM handling all the sensitive customer information?
  • What is the pricing structure in the short-term and long-term?

Showcasing seven ways of identifying business requirements for a Retail CRM.

With many CRM vendors to choose from, it is possible to select an industry leader that showcases many features and functionalities but provides little to no value for your business needs. When retailers go through a thorough business requirements gathering process with the key stakeholders and primary users, it can help achieve the targeted ROI and address the major shortcomings in the current state.

Defining The Right Evaluation Approach

1. Vendor Requirements & RFP

Once the requirements are identified, you may issue an Request For Proposal outlining the core needs such as specifications, budget, and timelines. This approach works best if you intend to invite many vendors for evaluation. The RFP responses will help quickly disqualify the key vendors and streamline remaining evaluation process.

2. Vendor Demos & Presentations

RFP responses alone shouldn't be considered while evaluating vendors and the responses should be taken with a 'grain of salt'. Most vendors try to check every box of an RFP. This is where detailed demos & presentations will highlight the truths vs. marketing twists. Full day onsite presentations and hands-on demos not only give a better understanding of the vendor capabilities, but will also help develop a better vision for the solution.

3. Vendor Reference Checks (Customers & Analysts)

Reference calls can potentially unearth some hidden nuggets that can help the decision making process. Seeking unbiased opinions (both pros and cons) during the entire lifecycle of the product implementation and usage from both C-level execs as well as actual users of the system can provide useful perspective. Speaking with analysts can bring some insights that cannot be overlooked.

4. Rating System - Consensus & Leadership Approval

Finally, when it's time to rate and select a vendor, the size of your company and the way it operates should be considered. If it is a team consensus, the decision process should be well-thought and well-planned to accommodate the majority. During stalemate, it's important to have pre-defined criteria to break the stalemate. The leadership approval is critical while selecting a vendor.

4 steps defining the right evaluation approach for Retail CRM.

Evaluation Criteria & Selection

The detailed Retail CRM evaluation criteria matrix.

Creating an Evaluation Criteria Matrix

When evaluating retail CRM vendors, there will be a number of areas and options to consider. Creating an evaluation criteria matrix, or matrices, will help organize and prioritize the areas that matter most to your organization.

Each company will have their own requirements to fulfill when evaluating CRM vendors. Most retailers will consider many of the same features and functionalities but will be up to the stakeholders to figure out which areas will bring the most value from the implementation. For example, your company will have to determine if loyalty management takes precedence over the reporting and analytics functionality.

Once the main areas for evaluation have been weighted and established, defining what is needed from each of those areas should be next. For example, your company may need an analytics tool within the CRM, but does real-time reporting take precedence over the loyalty capabilities? The evaluation criteria matrix will help with these decisions.

The criteria to evaluate the overall quality of a Retail CRM.

Soft Criteria for Evaluation

Don't forget to evaluate these...

As important as it is to evaluate vendors based on the overall quality of their product and services, features and functionality, and their pricing and timelines, it is also important to evaluate vendors based on soft criteria, as this will help determine how well they will work with your team and company during the implementation process.

Gauging the vendor's participation and reference feedback will determine how committed they are to showcasing their product and services in a timely manner in association with your company. If the vendor is difficult to work with, you may not be getting the most value from the CRM itself and may not be worth selecting.

Reviewing the vendor's history and industry credentials are important as it shows how familiar they are with any regulations, processes, and terminology they need to be successful in implementing a CRM system.

About HGS Digital

HGS Digital is a marketing technology consulting and services provider that has helped marketing and IT teams within 100+ organizations with digital transformation solutions. Through our data-driven marketing services, we help customers select the right CRM systems and implement a complete data strategy that helps marketing teams get higher ROI out of their existing marketing investments.

Our CRM and Data Practice has trained and certified CRM (Customer Relationship Management), CDP (Customer Data Platform), Tag management, DMP (Data Management Platform) and Big Data experts who help clients successfully strategize and implement data-driven marketing solutions within their organization.

By integrating the right data from different systems, we help clients understand their customers better. Through AI and ML based data analysis and reporting, we're able to provide our clients highly valuable insights that they can action upon.


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