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CRM PROJECT PROPOSAL

GROUP 1

10/18/2013

BY

Mohit

Gautam

Harshita

Amit

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RETAIL INDUSTRY

Retail industry, one of the sunrise sectors is the fifth largest in the world with a huge growth

potential and accounts for 14-15% of the countrys GDP. The Indian retail industry is one of the

fastest growing industries in India especially over the last few years, and comprises of organized and

unorganized sectors.

According to the Global Retail Development Index 2012, India ranks fifth among the top 30 emerging

markets for retail. The recent announcement regarding Foreign Direct Investment (FDI) in retail by

the Indian government allowing 100% FDI in single brands and multi-brand FDI has created positive

sentiments in the retail sector.

The following sectors occupy a prominent position with the retail industry:

1. Discount store model Big bazaar2. Cash and carry format Metro3. Luxury liner Tanishq

In this project we will try to analyse these sectors with the help of following questions:

1. How customer profitability is analysed in retail?Customer profitability analysis is one the most important steps to developing good

consumer relationships as well as to increase profits of the firm. Customer profitability

analysis is based on the premise that each customer is unique. The revenue contributed and

cost incurred for each customer is different. It can be used to identify its unprofitable

customers and to concentrate on the most profitable ones. In the absence of this, the firm

may be misallocating funds. It can be measured in the simplest way by calculating the net

margin realized and cost incurred. In general, product costs will be known for each

customer, but sales and marketing, service, and support costs are mostly treated as

overhead. Customer profitability analysis (CPA) refers to the allocation of revenues and costs

to customers, such that the profitability of those individual customers can be calculated.

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Customer profitability in Retail industry is usually carried out using many metrics. Some of

them are

CLVCLV is used to measure profitability at an individual level. Customer lifetime value is defined

as the net present value of the future profits from a customer. It is now seen as a very

important factor that helps in making good marketing decisions and analysing customer

profitability.

CUSTOMER EQUITYThis is used to measure profitability at the aggregate level. It is equal to the total combined

customer lifetime values of a companys customers.

Activity-based costing (ABC)Led to an increased understanding of extent to which the firms different resources are used.

For all the cost pools, cost drivers are identified. Cost are then allocated to cost objects

based on which these objects require certain activities. The size, number of orders, no of

sales visit and other services leads to different levels of customer profitability.

Information technology makes it possible to record and analyse more customer data both in

type and in amount. As data such as number of orders, number of sales visits, number of

service calls, etc. are stored at the level of the individual customer, it becomes possible to

actually calculate customer profitability by analysing all.

2. What solutions are used by global players?Globally the solutions used for customer relationship management are

Building and managing loyalty programs Managing campaigns and promotions Database of customer information Segment and managing lists

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3. What kind of CRM led strategies they have created?

We found that most prominent retail CRM strategies used in Retail Industry wererelated to:

1. Marketing, such as targeted marketing efforts

2. The use of e-mail and e-coupons to deliver shopping incentives.

3. Customer analysis efforts, such as the use of analytical tools

4. Analysing spending patterns and multichannel customer tracking.

5. The use of customer loyalty programs followed in frequency.

6. Implementing special customer services by offering general service enhancements.

7. Providing shopping assistants.

We will try to analyse these strategies in detail in this report

4. What contextual issues limit application of global solutions to Indian players?

The main concern of these organizations is their ability to make the necessary changesat the level of organizational strategy that the introduction of the CRM.

Organizations are also concerned about damaging their existing customer care system.Their fears are based on past failures in their own or in other organizations.

Failure in the introduction of the CRM system, especially in service and sales phonecentres, can result in real disaster for the organization.

Thus, in this report we will focus on issues that must be addressed in order to ensure that a new

CRM system is introduced in the organization in the best possible way, generating maximum

return on investment, without affecting current activity, and with minimal risk.