karthik vengatesan sainsbury - retail operations & crm

4/12/2015

CRM Strategies & Implementation | Karthik Vengatesan-13MBA1031

KARTHIK

VENGATESAN

13MBA1031

CUSTOMER RELATIONSHIP MANAGEMENT –

STRATEGIES & IMPLEMENTATION AT

SAINSBURY STORES

Karthik Vengatesan – 13MBA1031

Sainsbury Stores * 3rd Largest Retail Store

* 16.5% Market Share (UK)

CRM Strategy & Implementation

Introduction

CRM is a term that has multiple definitions. For example, CRM is simply a bridge between

marketing & IT; and hence CRM is an IT-enabled sales & service function. For others, its little

more than precisely targeted 1-to-1 communications. CRM helps in establishing

relationships through various steps, namely;

1. Customer Portfolio Analysis

2. Customer Intimacy

3. Network Development

4. Value Proposition Development

5. Managing Relationships

Sainsbury store is known for its well known establishment of modernized CRM framework.

In retail business, an effective customer relationship management represents essential, due

to the changing pattern of market dynamics.

CRM Strategies & Implementation – Sainsbury Retail Stores

Customer Intimacy

Choosing customers is one thing. Getting to know them well is altogether different. Most

companies collect customer data. Some industries are overwhelmed with information such

as; scanner data, loyalty card data, complaints files, market research, geo-demographic

data. The challenge is to use the data better for understanding of customer behaviour. At

Sainsbury Stores, Data Mining is an intelligent method through which it sets a competitive

advantage from its competitors.

Sainsbury has a well reputed Customer Intimacy to establish its Customer Relationship

Management. Once there was a letter from a 3 ½ old girl, a consumer of Sainsbury asking,

“Why was tiger bread called a tiger bread, instead of calling it a giraffe bread?” Sainsbury

loved the interaction from the 3 ½ year old child and took action to change the name of the

bread as per the request from the baby.


Below was the reply from Sainsbury Store along with a £ 3 gift card to promote further

sales.

Not just with the reward for 3 Euro, the company went on to make a public announcement

to rename the bread to Giraffe bread as per the baby consumer’s request.


Developing Networks At Sainsbury Stores, competitions are not against companies. That is, Sainsbury doesn’t

compete with Tesco. But their respective networks compete. Tesco’s network includes

Royal Bank of Scotland for its retail banking offer and Privilege Insurance for its insurance

offer, which is working better than Sainsbury. A company’s network position i.e. its

connectedness to other parties whi co-operate in delivering to the chosen customer is a

great source of competitive advantage. CRM requires owners and investors who will commit

to long-term investment in the people, processes, and technology to implement CRM

strategies.

Loyalty Card Holders – Customers

Loyalty card holders of Sainsbury do not shop at other retailers and always come back to

Sainsbury for the next purchase. Whereas, customers who do not hold such Loyalty Cards

tend to switch between different retailers. Newsletters sent to loyalty card

holders/customers are the most reliable way to share information to the customers. The

Loyalty Card scheme was introduced

through the name, Nectar Card Scheme.

The program raised massive response

among customers. The Card Holder

Membership program has been able to

spread over a solid customer base of 11.5

million customers since its introduction at

2002. The Nectar Card scheme is

considered as having connection with

increased number of partners and

attracting the attention of more customers from all over the world. The Nectar Card offers

partnership with retailers and organizations and has been playing the key role to collect

customer data. In terms of TESCO, customer data was collected only within TESCO whereas,

Sainsbury Stores collects data with its partnership organizations and through other sources.

During Christmas 2011, Sainsbury experiences the highest number of Nectar card users that

has allowed redeeming points worth up to £100 million. Rewards generated through use of

Nectar data has been offered in the store that has allowed customers to potential

purchases.


The Nectar Card Scheme has helped policy makers at Sainsbury stores to understand where

the business can be established or expanded.

Social Networking

Sainsbury stores has managed to have a strong presence in social networking websites such

as Facebook, Twitter, Bebo and few others.

In terms of Social Networking Presence, Sainsbury does effective evaluation in order to find

its Word of Mouth and customer advocacy through various techniques. Below image shows

the sentiment analysis for Sainsbury.

Recent Trends of CRM at Sainsbury

Sainsbury Stores has been in a continual process of applying customer relationship

management strategies into practice. Sainsbury has a magazine that’s being mailed to

customers with the details of latest and exclusive offers. These magazines have

advertisements, articles and latest news on the products and services. Sainsbury has also

been gradually encouraging the shoppers to shop online and in store. Sainsbury has been


prioritizing on collecting information on the customers experiences. This becomes an

effective element to formulate most beneficial and effective marketing strategies.

Components of CRM Strategy – Sainsbury

Gender and Age Group as Core Target of CRM

Frequency of Shopping as a Goal of CRM

Shopping at other Retailers as an Indicator of Ineffective form of CRM

implementation

Store selection as a Sign of Recent Trend of CRM

The IT Enabled CRM Way

Sainsbury has invested in Tera Data Data Warehouse System in 2002 in order to enable data

capture, creation, processing and analysis for understanding consumer behaviour. Since its

investment the ROI from direct marketing has risen threefold.

The 5Tbyte Data Warehouse, which is used to analyse Nectar Card Information to improve

the accuracy of marketing campaigns, has provided a number of benefits across the

business. Significant cost savings have been realized by doing the customer analysis in house

instead of using agencies.

The Head of Marketing Analytics – Alex Fovargue says;

Improved information has allowed the retailer to ensure stores are offering the correct

product mix. There are 10 customer segments, which are based on purchase behaviour.

Using Teradata has allowed Sainsbury to create clustered store formats to deal with

variations. Sainsbury has completed its business transformation programme it began with

Accenture in 2000. The merging of Teradata datawarehouses for customer and trading

information. This will allow the marketing department to analyse roll data as well as Nectar

Card Information, increasing accuracy of Campaigns.

IT overhaul at Sainsbury’s has included 14,000 NCR point of Sale systems running Retailix

Software 1000 services based on Sun Microsystems and EMC Technology 6000 Compaq HP

Desktops and Retex Merchandising and forecasing software.

We have a single customer view, which helps other areas of the business, such as energy

and utilities, and we can report how a campaign is going days after it has dropped. Most

importantly, targeting is data-driven rather than being done on gut feel.


Family Programme & Other Services

In 1998, Sainsbury launched the Family Programme to communicate with family customers

with young children and pregnant women. The aim of this research is to demonstrate that it

has a caring organization that knows it customers well and understand their needs. With

increasing focus on diet, health and nutrition, championing basic everyday quality at

appropriate and fair process. Sainsbury is committed to restoring and delivering its Unique

Customer Proposition. Sainsbury’s traditional focus on fresh and own label products in

order to increase Sainsbury reputation for innovative and quality products at fair prices. In

particular, through sub brands like Taste the Difference and Be Good to Yourself premium

and health ranges will be the best available and a significant point of difference from other

mass market operations.

Sainsbury stores concentrate on an iconic initiative that can make a difference. These

initiatives are based on five corporate responsibility principles;

1. Respect for the environment

2. Best for food and health

3. Sourcing with Integrity

4. Making a positive difference to our

5. Sourcing with integrity.

Marketing Plan

The marketing plan shows how the company will develop and maintain profitable customer

relationships. In the process, however, it also develops a number of internal and external

relationships. It affects how marketing personnel work with each other and with other

departments to deliver value and satisfy customers. All these relationships are important to

the organizations success, so they are be considered when the marketing plan is being

developed.


The essence of Sainsbury’s CRM

The objectives of a CRM strategy must consider company’s specific situation and its

customers needs and expectations. Information gained through the CRM initiatives can

support the deveoplment of marketing strategy by developing the organization’s knowledge

in areas such as identifying customer segments, improving customer retention, improving

product offerings (by better understanding customer needs), and by identifying the

organizations most profitable customers.

Sainsbury has identified its customers and increasing value added components to the

customer is a key dimension to its profitability. Sainsbury is driving towards establishing a

dialogue with customers, understanding and anticipating customer change, and attempting

to maximize the lifetime value of the customer. Think about what your service, and the

manner by which you deliver it, means to your customer this strategy is helping Sainsbury to

narrow its losses.

Sainsbury’s Research Techniques

There are multiple channels through which Sainsbury which can be listed as below;

Primary Research

o Direct contact

o Internal research

o Feedback from customers

Secondary Research

o Market analysis

o e-Business

o Data Analysis

Customer Relation Management

Three Key Methods

1. Customer Acquisition; 2. Customer Retention; 3. Customer Extension

Three Contextual Factors

1. Marketing Orientation; 2. Value Creation; 3. Innovative IT


Conclusion

CRM is widely misunderstood by marketing management and seriously misrepresented by

software houses. Companies are being sold front-office and back-office solutions, but are

missing on the fundamental, strategic benefits that CRM can provide. CRM at its most

sophisticated has the potential to integrate all business process around the requirements of

strategically significant customers, a fact that most IT Solutions fail to acknowledge. The

basis for better understanding customer behaviour & customer segment for customer

relationship management is the Loyalty Card Holders. Sainsbury stores view that customer

relationship management has been continually covering areas like building and maintaining

relationships with the core base of customer, income and sales. Relationship with customers

is considered as the most influential factor of CRM.

References & Sources

1. International Journal of Managing Value and Supply Chains (IJMVSC) Vol. 4, No. 1,

March 2013

2. The CRM Value Chain - Francis Buttle, Macquarie University

3. www.computerweekly.com

4. www.thisisnumero.com

5. www.ukessays.com

6. Google Images