CUSTOMER RELATIONSHIP MANAGEMENT

Customer Relationship Management

Customer Relationship Management

This paper provides a comparison of Customer Relationship Management practices in three of leading British firms namely - Tesco, Marks and Spencer, and Sainsbury. Customer relationship management (or CRM) is an emerging managerial philosophy closely aligned with the intersection of marketing and information technology (www.loyalty.vg). CRM suggests that the goal of a business organization should be to develop, enhance, and maintain relationships with its “best customers.” (The term customer is used here to include both end-user consumers and business-to-business customers.) Terms such as “strengthening the bond between customer and company,” “customer-focused strategy that drives profitability,” and “customer retention” are often associated with CRM (www.princecon.com). In this view, not all customers are created equal, and it is in the organization's interest to create long-term relationships with a strategically targeted segment of the customer population that will best contribute to the organization's success.

Often success is defined in terms of profitability (for example, “the 20% of the customer base that is responsible for 80% of the revenues”), although customers may also contribute to organizational success through enhancing the organization's image, word of mouth, or other types of influence. However success is defined, the intention is to identify, target, and nurture those customer relationships that are most critical to that goal (www.experiencematters.wordpress.com).

Tesco CRM Strategy

The Tesco story dates back to 1919 when Jack Cohen (Cohen), an ex-army man, set up a grocery business in London's East End. In 1924, Cohen purchased a shipment of tea from a company named T E Stockwell. He used the first three letters of this company's name, added the 'Co' from his name and branded the tea 'Tesco.'

Every three months, millions of people in the United Kingdom (UK) receive a magazine from the country's number one retailing company, Tesco. Nothing exceptional about the concept - almost all leading retailing companies across the world send out mailers/magazines to their customers (www.icmrindia.org).

These initiatives promote the store's products, introduce promotional schemes and contain discount coupons. However, what set Tesco apart from such run-of-the-mill initiatives was the fact that it mass-customized these magazines. Every magazine had a unique combination of articles, advertisements related to Tesco's offerings, and third-party advertisements (www.silicon.com).

Tesco's efforts towards offering better services to its customers and meeting their needs can be traced back to the days when it positioned itself as a company that offered good quality products at extremely competitive price. Commenting on the way the data generated was used, sources at Dunnhumby said that the data allowed Tesco to target individual customers (the rifle shot approach), instead of targeting them as a group (the carpet bombing approach). Since the customers received coupons that matched their buying patterns, over 20% of Tesco's coupons were redeemed - as against the industry average of 0.5% (www.icmrindia.org).

It is hoped that the investment will vastly improve the electronics division of the company, Tesco Digital, with the software-as-a-service being implemented alongside its call centre workers to respond to queries and problems which crop ...