Customer Relationship Management
Customer Relationship Management (CRM) is a strategy designed to maintain company??™s customers, clients and sales prospects. Chen and Popovich (p.3, 2003), states that,
??????Customer Relationship Management is a combination of people, processes and technology that seeks to understand a company??™s customer. It is an integrated approach to manage relationship by focusing on customer retention and relationship development??™??™.
The objective of this assignment is to evaluate an organisation using appropriate data identifying opportunities and ways of increasing company??™s revenues. The organisation chosen for this study is Tesco plc.
Tesco plc is one of the world??™s largest food and grocery retailers, with 2482 stores in United Kingdom and 953 stores in other European countries, employing 287,699 in the United Kingdom and 86,576 in other European Countries (Tesco PLC Annual Review and Summary Financial Statement 2010).
The reason Tesco plc has been chosen is because of its ability to maintain its numero uno status since mid 1990??™s and its ability to maintain its customer base. Tesco plc is considered to be the ??????Champions of Customer Relationship Management??™??™ (icmrindia.org).
Customer Relationship Management
In order to stay ahead and be competitive in the market, it is essential for the companies to offer ??????superior products and services??™??™ (Brown, 1999) to its customers, so that they keep coming back to the same company, whenever, they want to purchase. Further, Brown (1999) in his book states that, ??????in order to compete effectively in todays marketplace, organizations must change their strategy to become more customer focused, not product focused. Customer Relationship Management (CRM) is the best way to integrate this customer-facing approach throughout an organization. Aimed at understanding and anticipating the needs of an organizations current and potential customers, and the same time showing How Customer Relationship Management (CRM) links people, process, and technology to optimize an enterprises revenue and profits by first providing maximum customer satisfaction??™??™.
Customer Relationship Management overall is a marketing activity, for example, it involves activities such as, ??????market segmentation, customer acquisition, customer retention, customer development etc, apart from that CRM extends into selling and service functions??™??™ (Buttle, p.13, 2009). CRM can be used to integrate customer information with various other departments etc.
Tesco plc was started in 1920 and is currently world third largest grocery and general merchandising retailer, with significant interest in telecoms, financial services etc, Tesco plc has business interest across all over the world with collective ??????4811 stores??™??™, employing around ??????472,000??™??™ people in countries such as, ??????Ireland, Hungary, Slovakia, Poland, Turkey, United States of America, Thailand, Malaysia, China ?????™etc and United Kingdom serving as it main base (Tesco PLC Annual Review and Summary Financial Statement 2010).
Tesco plc reported sales of ?42.3bn for its United Kingdom operation and ?19.4bn for its international sales for the year 2009- 10 (Tesco PLC Annual Review and Summary Financial Statement 2010). Tesco plc reported increase in its sales by 8.8% for its international business and 4.2% for it UK business, controlling 31.6% of United Kingdom??™s market.
Tesco plc??™s objectives are:
* To be a successful international retailer
* To grow the core UK business
* To be as strong in non-food as in food.
* To develop retailing services – such as Tesco Personal Finance, Telecoms and Tesco.com
* To put community at the heart of what we do.
Customer Relationship Management at Tesco plc – Strategies
In this section we will discuss the Customer Relationship Management (CRM) initiatives undertaken by the Tesco plc over the years. Tesco plc has been practising Customer Relationship Management (CRM) for over the last three decades. In 1979 Tesco plc launched a price cutting campaign called ??????Checkout at Tesco??™??™ (Wadekar, 2007). In 1985 Tesco plc launched a ??????Healthy Eating??™??™ campaign to educate its customers on nutritional value of their food (Wadekar, 2007).
In order to reach out and offer better service to all of its customers and prospect customers, Tesco plc launched three formats of stores in 1990. They were as follows:
1) Tesco Metro – to serve local community of region
2) Tesco Express ??“ combination of petrol pump and convenience stores
3) Tesco Extra ??“ Hypermarkets focussed equally on food and non food merchandise.
In 1993 Tesco plc launched a training initiative called a ??????First Class Service??™??™ to provide a better service to its customers, where store staff were completely committed to fulfil customers??™ needs (Tesco.com).
In 1994 Tesco plc launched another initiative called ??????One in front??™??™ scheme to help its customers reduce their time in checking out from the store (Wadekar, 2007; www.Tesco.com), ??????Where if there is more than one customer queuing at a single checkout we open another??™??™ (www.Tesco.com).
In 1994 Tesco plc tied up with Dunnhumby to introduce Club card Loyalty Scheme, for marketing purpose, by building up customer database collecting Name, Address, Date of Birth, Email address etc of the customers.
In 1995 Tesco launched Club card Loyalty Scheme, rewarding its customers for their loyalty, Club card not only rewards Tesco plc??™s customers, but it also provides Tesco plc, ??????an insight into changing shopping pattern of its customers??™??™, which helps the company to alter and respond to the changes.
Further, Tesco plc launched another initiative called ??????Every Comments Help??™??™, ??????where feedbacks are collected from the customers via email, phone or texts, to improve the offer and services??™??™ (Tesco.com).
In 2000, Tesco plc launched it online shopping web site Tesco.com, later rebranding it to Tesco Direct, for its busy customers, where customers could choose the product they wanted on a website or a catalogue and order for it via online, phone, or at Tesco Direct desks, customers had the option to get the goods delivered at their home or picked up in a local store.
Apart from this, Tesco plc runs a bank called Tesco Bank in joint venture with Royal Bank of Scotland, and Tesco telecom for which Tesco plc entered into an agreement with Cable and wireless in 2009, to provide wholesale broadband.
To ensure that a customer receives items of highest quality, which are fresh at the lowest price, Tesco plc should provide promotions at regular intervals to benefit the customer which will eventually help to enhance sales at its stores.
For any business to be successful it is important for the employees of the company to be its best behaviour, Tesco plc employee should follow a code of dealing with its customers, such as being nice and friendly to its customers, to greet its customers, to offer them help, always available to assist them, wishing them a good day
Customer Satisfaction, Customer Loyalty and Business Performance
The main purpose of Customer Relationship (CRM) is to ??????improve the business performance of the company, by enhancing customer satisfaction, their needs and driving customer loyalty??™??™ (Buttle, p.43, 2009). Apart, from that, Customer Relationship (CRM) helps to build customer database containing customer information, such as, Name, Address, email address etc, which helps the company to understand customers better and their buying behaviour, so company can make the necessary changes in its strategies.
Customer Satisfaction plays a crucial part in Customer Relationship Management (CRM), it helps to define and measure satisfaction of customer in many ways. Buttle (p.4, 2009), states that, ??????Customer Satisfaction is the customers fulfilment response to a customer??™s experience or some part thereof??™??™.
In order to measure its customers satisfaction, Tesco plc, launched an initiative called ??????Every Comments Help??™??™ (Tesco.com), where feedbacks are collected from the customers via emails, phone or texts to improve the offers and services. This initiative helped Tesco plc, to receive around 60,000 feedbacks from its customers to improve its services (Tesco PLC Annual Review and Summary Financial Statement 2010).
Further, to satisfy its customers??™ needs and to take their opinion on how to improve, Tesco plc conducts Customer Question Time every yearly. Apart, from that, every Tesco plc has Customer Comment Card (Tesco.com/Talking Tesco) where customers can comment on their shopping experiences at the Tesco stores.
Tesco plc should consider of using social networking sites such as Facebook, Twitter, and iPhone applications etc for its busy customers and to improve and provide better customer??™s services to its customers by receiving complaints, providing information, online shopping, answering queries of the customers etc. In order to make it a success, Tesco plc will have to train its staff in answering the customers contacting the company.
Apart from this, Tesco plc should publish free monthly magazines for its customers to educate its customers on various new trends, health, beauty, nutrition, good living, and many other things, this would help the company to fulfil its duty of Corporate Social Responsibility and the same promoting its products and items.
Tesco plc believes ??????Customers expect to be able to shop was where and when they want ??“ as well as having great stores??™??™ (Tesco PLC Annual Review and Summary Financial Statement 2010), to fulfil the needs of its customers Tesco plc has been making great efforts in increasing the number of its stores, Tesco plc had been making great efforts increasing the number of its worldwide, in 2010 Tesco plc had 4811 stores in comparison to 4331 stores in 2009.
Tesco plc as an organisation should be involved in practice of fair Corporate Social Responsibility, dealing in ethical manner with the suppliers, supplying high quality items, supporting various causes, to recycle waste stuff, paper, plastic etc could help to get the company to win loyalty of the customers, by winning their confidence.
Like Customer Satisfaction, Customer Loyalty too, plays an important role in the Customer Relationship Management (CRM) of a company. Dick and Basu (Abstract, 2006), defines Customer Loyalty as,
??????Customer loyalty is viewed as the strength of the relationship between an individual??™s relative attitude and repeat patronage. The relationship is seen as mediated by social norms and situational factors. Cognitive, affective, and conative antecedents of relative attitude are identified as contributing to loyalty, along with motivational, perpetual and behavioural consequences. Implications for research and for the management of loyalty are derived??™??™.
Loyalty plays an important role in many of the businesses, where customer is lured to discounts and freebies on becoming a member of a scheme, for that, a customer has to fill up a form giving his details. The information gathered helps the company ??????to become more effective at customer communication and offer development??™??™ (Buttle, p.14, 2009), Overall Loyalty schemes help to develop customer data through which a company can make an acquisition of new customers, retain the old customers, develop new brands and customers etc to have them as part of their business.
In 1995 Tesco launched Club card Loyalty Scheme, rewarding its customers for their loyalty, Club card not only rewards Tesco plc??™s customers, but it also provides Tesco plc, ??????an insight into changing shopping pattern of its customers??™??™(Tesco PLC Annual Review and Summary Financial Statement 2010), which helps the company to alter and respond to the changes.
In order to maintain customer loyalty it is important for Tesco plc, to give freebies to its customers, offer more promotions at its stores etc, Dunn (2009), states that,
???Customers love getting freebies. They want more promotions; more offers and rewards ??” either money off or just money.???Such acts help to develop loyalty among the existing customers and attracting new customers as well form a strong customer base.
Further, Tesco plc, should direct more promotions towards certain section of society, to develop loyalty amongst them, for example, Tesco plc had launched an initiative called ??????Me Time??™??™ directed towards its ??????women customers, offering them free sessions at Spas, Luxury Gyms, and Beauty Salons etc??™??™ (Wadekar, 2007), Tesco plc should introduce special offers for students who are big customers for them.
Overall Tesco plc should invest more to understand its customers, via its ??????Customer Insight Skill Research??™??™ (Tesco PLC Annual Review and Summary Financial Statement 2010), to understand their shopping habits, to listen to them and to make the necessary changes and adapt to it as quickly as possible.
Non Food Retail
Tesco plc should concentrate on having more Hypermarkets store where they were offer ??????all in one store goods??™??™, this could help the company to increase its sales and at the same time help its customers to shop everything from the same store, satisfying the customer needs.
Health and Beauty
Tesco plc should develop its health and beauty sector, considering health and beauty to be the fastest growing sector in the world. It should seriously focus on developing pharmacies store and having opticians at its store, which could help its customers to have everything from the same store.
Home Living Range
Tesco plc has yet to organise its business in Home Living sector, Tesco has got enormous scope in developing its home living business, which could help the company to win more customers, satisfying their needs and offering all in one store shopping experience. This would help the company to win new customers and increase it revenue.
Another opportunity for Tesco plc is to develop its Insurance business, Tesco plc can take advantage of covering its shoppers shopping, by offering insurance for their goods, and this would help to tie the customers to the same company, making things easier for the shoppers and company to deal with each other.
Telecom and Banking
Tesco plc should concentrate on expanding its telecom and banking business, they should target its customers, making things easier for them, by offering everything in one store.
Every company that wants to expand its business has to maintain Customer Relationship Management within its company, to help retain old customers and to get new customers, by satisfying them with their needs.
Tesco plc, is truly ??????Champion of Customer Relationship Management??™??™, Tesco plc over the years have launched numerous Customer Relationship Management initiative, such as ???Every Little Helps??™, ???Healthy Eating??™, ???Every Comments Helps??™ ???Club Card Loyalty Scheme??™ to satisfy its customers and win their loyalties.
Even after launching all this initiatives, Tesco plc can still do better to offer better services to its customers, such as developing its Telecom and Banking, business, Non food retail business, Insurance, Home living range etc, this would help to attract customers to shop and deal everything from the same company, and would enable Tesco plc to have a loyal group of customers.
Further, Tesco plc should conduct more promotions; free give a ways etc at its store, so customer will feel pampered. Apart from that Tesco plc should introduce free magazines for its to educate them on new trends, life style, new products etc in the market.
Therefore, we can conclude that no matter How much company is perfect and has done to maintain its Customer Relationship Management, It has still to keep doing new things, bringing new innovative ideas to maintain its group of customers and at the same time to get new ones, so it helps the company to expand and see the growth in its revenues.
Brown, S., (1999), ??????Customer Relationship Management: A strategic Imperative in the world of E-Business??™??™, 1st? Edition, John Wiley & Sons, Inc.? New York, 1999, ISBN: 0471644099
Buttle, F., (2009), ??????Customer Relationship Management: Concepts and Technologies??™??™, Published by: Elsevier Ltd.
Chen, I. and Popovich, K., (2003), ??????Understanding Customer Relationship Management: People, Process and Technology??™??™.
Dick, A.S. and Basu, K (2006), ??????Customer Loyalty: Toward an Integrated Conceptual Framework??™??™, Journal of the Academy of Marketing Science.
Dunn (2009), Interview with The Times, http://business.timesonline.co.uk/tol/business/industry_sectors/retailing/article6859996.ece
Tesco PLC Annual Review and Summary Financial Statement 2010. http://ar2010.tescoplc.com/~/media/Files/T/Tesco-Annual-Report-2009/Attachments/pdf/Full-Review.pdf.
Wadekar, (2007) http://www.scribd.com/doc/27870053/Tesco-the-CRM-Champions