Customer Relationship Management

CRM at Pantaloon Retail Ltd.

Date 05/02/2013
Submitted By

Group - 5, Sec B

Contents
Pantaloon Retail India Limited ................................................................................................................ 2 Introduction ........................................................................................................................................ 2 Financial Data...................................................................................................................................... 2 What is CRM for Pantaloon..................................................................................................................... 2 For Pantaloons, CRM means ............................................................................................................... 3 Objectives of CRM as a strategic tool ..................................................................................................... 4 Expected benefits of CRM for Pantaloon and the need for using CRM.............................................. 4 CRM Implementation in Pantaloon ........................................................................................................ 8 Process followed while implementing CRM ......................................................................................... 10 Key Issues faced .................................................................................................................................... 11 Learning from the process .................................................................................................................... 11 Performance Evaluation of Pantaloon RIL post CRM implementation................................................. 12 Insights from Interviews ....................................................................................................................... 14

Pantaloon Retail India Limited

Introduction
Pantaloon Retail is the flagship company of Future Group, Indias retail pioneer catering to the entire Indian consumption space. Through multiple retail formats, Pantaloon connects a diverse and passionate community of Indian buyers, sellers and businesses. As Indias leading retailer, Pantaloon Retail inspires trust through innovative offerings, quality products and affordable prices that help customers achieve a better quality of life every day. They have a customer base of 300 million and the products and services supplied by over 30,000 small, medium and large entrepreneurs and manufacturers from across India. Pantaloon has customers in 93 cities and 60 rural locations across the country through over 17 million square feet of retail space.

Financial Data

What is CRM for Pantaloon

In India, the retailers play a vital role in selling goods to the ultimate customer and day by day numbers of retailer are increasing tremendously and ultimate end users are being confused and customers keep on changing the retail store. The numbers of store are increasing easily and retaining a customer by apparel retailers is becoming very difficult.

Apparel retailers try to retain customer using various customer program because relationship with customer is more important.

For Pantaloons, CRM means

Leveraging sourcing strengths in all product categories, logistics and delivery network and lower cost of customer acquisition and integrating it with a strong technology backbone. Technology has the potential to be a game change and a significant value creator for the organization in the long run. The integrated platform on the digital space has the potential to contribute around 15% of turnover at significantly lower cost. Below mentioned are the ways which will contribute to achieve the above stated objectives. Better customer service Cross-sell and up-sell Increased customer satisfaction Enhanced Customer relationship Customer buying behaviour pattern analysis Better employee performance

Objectives of CRM as a strategic tool

Expected benefits of CRM for Pantaloon and the need for using CRM
Customization:- Better customer service o Each employee in the store is aware of the discounts and offers available in the store as well as individual customer buying behaviour. This will help them in offering customized products and services as per their requirements. Data Mining:-Customer buying behaviour pattern analysis o Once a customer uses the loyalty card for billing the amount and redeems their points accumulated (if any), the details are sent to a customer data base, which is being operated by a service operator at every store. It helps to recognize the individual purchasing and repurchasing behaviour over a period of time. Customer Development:- Cross-sell and up-sell o The store uses cross-selling method to push the number of sales. Every employee in the store is aware of the discount offers across the stores and shares every possible detail with all present in the store. They are also being trained to read the customer purchasing behaviour and simultaneously recommend them similar product with additional feature or discounts. Loyalty Programs, Optimized marketing:- Increased customer satisfaction

o They are increasing customer satisfaction through Loyalty program which they are running from year 2006. They have three different kinds of loyalty initiatives namely T24, PAYBACK and Greencard. o In PAYBACK, Shopping is rewarding. PAYBACK is a German company which is Indias largest multipartner loyalty program. In India, PAYBACK has 26 outlet partners and the utility of this program can be used across the outlet partners. Pantaloon have merged Greencard benefits to the payback and offer customers both the discounts (Friday discount) and the points to be redeemed anywhere across the partnered outlets of PAYBACK. The discount offer has to be used only in the Pantaloon stores across the country. Customers who earn points from any future group stores can be redeemed for air miles, movie tickets, air tickets and vice versa.

o In T24 program, Dual advantage all 24 hours of the dayShop More, Talk More and Talk More, Shop More. Customers will get shopping benefits for talking and talk-time benefits each time they shop. For e.g, Customers will get free talk-time for every purchase above Rs 500, a T24 customer buying products worth Rs 2,501 at Pantaloons or EZone will get 50 minutes of free

talk-time, a customer spending Rs 1,501 in Big Bazaar will gain 90 minutes of free talk-time for every purchase. o Using GreenCard Loyalty program, customers will get extra benefit depending upon whether they are 1star, 3 star, 5 star or 7 star customers. The customers who make a minimum purchase will be awarded 1star where as if their consolidated purchase for an year is Rs 8000/- will be automatically upgraded to 3 star, if it is 20000 then it is 5star and if it is 40000 then it is a 7 star.

Campaign

Management,

Channel

Integration,

Integrated

Customer

Communications:- Enhanced Customer relationship

o

The store uses customized way to pull the customers. They sent SMS/ Email customers about the offers and benefits. Customers being reminded if they are not using the PAYBACK Greencard for long time.

They also have customized schemes for occasions such us on birthdays and give customers additional Rs 500 worth gift voucher for a certain amount purchase and they also get back the redeemed points, they uses while billing.

CRM Implementation in Pantaloon

Pantaloon Retail decided to implement SAP to keep itself competitive in the rapidly growing Indian retail market. They wanted to sell customized offerings to customers based on their buying behaviour. They need to have a system in place where they can collect the customer data and analyze it accordingly. The result of the analysis will be sent to each store for cross selling and up-selling of their products as well. More over they want to have an enhanced customer relationship with their customers by improving the customer service and increasing the customer satisfaction. For any retailers, store operations have never been as important as they are now. For one to be successful, they have to win the customers which are possible only at the frontline or its stores. Pantaloon was expanding fast by opening stores in the metros and they needed a reliable enterprise wide application to help run its business effectively. The company was looking for a solution that would bring all of its businesses and processes together. After a comprehensive evaluation of different options and software companies, the management at Pantaloon decided to go in for SAP. Considering the scale and scope of the ambitious growth plans that the company has set for itself, technology will act as a crucial business driver and a catalyst in implementing the expansion plan. The SAP implementation will provide a complete end-to-end solution for all businessesof the group. Pantaloon have implemented mySAP Business Suite - IS Retail Solution, for core transactions and financial management and advanced functionalities and modules from the IS retail suite, like SAP MAP Tool for Merchandise and Assortment Planning; Automated

Replenishment systems, Advanced Warehouse Management, CRM, BW for Analytics and Business Intelligence, and SAP HR Solutions, for a robust retail operation. They have implemented a fully integrated transaction processing system, which would accumulate accurate real time data with respect to key function of the organization performs such as merchandise management, procurement, manufacturing, warehousing, logistics, inventory management, store operations and financial management. The company also did logical integration of more stringent measures of getting SAP and POS (Point of Sale) in sync in each lines of business. The company also put a renewed emphasis on Business Intelligence and Data Warehousing tools that will enable quick decision making across all businesses through seamless flow of data at all levels. Further, management dashboards have also been created and these are customized to individual business requirements. Some of the qualities of SAP retail solutions are that it supports product development, which includes ideation, trend analysis, and collaboration with partners in the supply chain; sourcing and procurement, which involves working with manufacturers to fulfil orders according to strategic merchandising plans and optimise cost, quality, and speedvariables that must be weighted differently as business needs, buying plans, and market demand patterns change; managing the supply chain, which involves handling the logistics of moving finished goods from the source into stores and overseeing global trade and procurement requirements; selling goods across a variety of channels to customers, which requires marketing and brand management; managing mark-downs and capturing customer reactions, analysing data, and using it to optimise the next phase of the design process.

Process followed while implementing CRM

The implementation

The implementation was outsourced to a third party. The implementation was done by the SAP team with help of Novasoft which is based out of Singapore. To further speed up the process, people from Pantaloon also assisted in the project. About 24 qualified people worked on this SAP implementation. SAP implementation project was divided into three phases. The first phase involved blueprinting existing processes and mapping them to the desired state. In this phase, the entire project team worked on current processes within the structure of the organisation, analysed and drafted them. This blueprint was later used in the formation of new states of the solution. Since the SAP would combine all the processes, each and every one of these had to be evaluated. In the second phase, the SAP platform was developed with the help of Novasofts template which was predefined by SAP after evaluation of Pantaloons needs and expertise in retail solutions. The last phase in this project was for stores to switch over to the new system and for current data to be ported. Before the SAP implementation, all the data was unorganised. This data had to be migrated to the new SAP application. The project was flagged off on 15th June 2005 and took about six months to finish. It went live at the head office on 1st January 2006. The stores went live on SAP from 1st January 2006 to 30th June 2006.

Aim

To deploy a robust transaction management system and an enterprisewide platform to run its operations. SAP retail solution SAP team with the help of Novasoft, Singapore Around 1,200 About six months About $10 million

Solution Implemented By Number of users Time taken Implementation Cost

Key Issues faced

The key challenges in this project were not in the implementation. Rather, the difficulties were faced during the data migration and in managing the interim period when the project was underway for about six months. Migrating unorganised data to an organised format is a challenging task.

Learning from the process

Pantaloon has not been able to see immediate benefits from this implementation. This application certainly has long term benefits which will be seen when the performance of various aspects will be analysed. This application is currently being used by around 1,200 employees across the organisation. For maintaining this implementation and its related applications, Pantaloon has an in-house team and it has outsourced ABAP resources. They are also in the process of setting up a SAP Competency Centre. The learning from the project is in the process of handling the project in a short time span, mapping the existing processes of Pantaloon with SAP, migration of the data from existing system to SAP, educating and training the users on the benefit of using SAP.

Performance Evaluation of Pantaloon RIL post CRM implementation

The performance of the organization can be measured using either traditional marketing metrics or customer based marketing metrics as shown below. Due to ease of measuring the performance, Pantaloon Retail has used the traditional approach. Traditional marketing metrics can be measured using Market Share and Sales Growth. Pantaloons Sales Growth is 27% in 2011 after implementing CRM and Pantaloons Green card Loyalty Program Revenue Contribution After implementing CRM and Loyalty program, 3.03 million members of Pantaloons has contributed to around 55% of store sales.

Note: Due to non availability of data, we were not able to get information on some of the customer metrics used by Pantaloon. From the interaction with the company employees and the annual report, we could identify that some of the metrics that they are using to evaluate the performance of the

organization after CRM implementation is as given below which falls under the primary customer based metrics. So we have decided to use the dummy variables to assess the performance on those metrics. Pantaloon ensures that the regular customers get better benefits for their consumptions This results in increased customer satisfaction which leads to better retention rate and increased lifetime. Hence cost of cost acquisition is also less and margins also go up.
Acquisition rate Market share and foot falls

Acquisition cost Margin Retention rate - Margin Lifetime Duration Margin Customer Portfolio Management CPM aims to optimise business performance whether that means sales growth, enhanced customer profitability, or something else - across the entire customer base It does this by offering differentiated value propositions to different segments of customers Pantaloon Retail India Limited is targeting customers in premium, middle and mass segments through different kind of retail outlets. In the premium segment, they have Central, in the middle segment they have Pantaloons, and in the mass segment they have Big Bazaar.

Insights from Interviews

We have interviewed a) Store manager b) A staff at the billing counter c) A staff serving the customers of pantaloons store at Saharaganj, Lucknow. We have chosen these people in the organization because they were directly involved in or were impacted by the implementation of CRM. The objective of our interview was to find out How they are identifying repeat customers? How frequent customers used to come and purchase and are they profitable? Do they use any loyalty card? If yes, how does the loyalty program work and how effective is the program How the customers as well as the organization are getting benefitted from the loyalty program? Brief summary of the interview with store manager: Pantaloons uses loyalty program Payback Greencard World to identify repeat customers. Once a customer uses the card for billing the amount and redeems their points accumulated (if any), the details are sent to a customer data base, which is being operated by a service operator at every store. It helps us to recognize the individual purchasing and repurchasing behaviour over a period of time.

 On an average, roughly 60000 customers purchases from the pantaloons store at Saharaganj. Around 50-60 % of customers repurchases at least once in a month. The customers are profitable to them, once they develop the habit of using the cards and redeeming their points at the billing counter. As many of the customers dont carry their cards with them and hence dont use it, which results in loss of data. They even used some customized way to pull the customers. Like SMSs/ Email them about the offers and benefits. They even remind them, if they are not using the PAYBACK Greencard for long time.They have customized schemes for occasions such us on birthdays, Pantaloons gave customers additional Rs 500 worth gift voucher for a certain amount purchase and they also get back the redeemed points, they uses while billing Brief summary of the interview with the staff at the billing counter: PAYBACK is a German company which is Indias largest multi partner loyalty program. In India Payback has 26 outlet partners and the utility of this program can be used across the outlet partners. Pantaloons have merged their Greencard benefits to the payback and offer their customers both the discounts (Friday discount) and the points to be redeemed anywhere across the partnered outlets of PAYBACK. The discount offer has to be used only in the pantaloons stores across the country. There is 4 PAYBACK points to be earned for every Rs 100 spent. And there are three types of PAYBACK Greencard used, which could be upgraded on the basis of purchasing amount while shopping. They uses PAYBACK Greencard silver, Gold and Platinum. Following summarizes the PAYBACK Greencard and its benefits

Brief summary of the interview with the staff serving the customers: They use cross-selling method to push the number of sales. Every employee in the store is aware of the discount offers across the stores and they share every possible detail with all present in the store. They are also being trained to read the customer purchasing behaviour and simultaneously recommend them similar product with additional feature or discounts. Insights from the interviews Customers forget to bring loyalty cards frequently every time they visit the store and this result in loss of customer data. This impact data mining process which is used to study customer buying behaviour and as a result may result in customized product offerings to individuals. If any customer forgets to bring loyalty card, they will not be able to earn points with the current shopping. Pantaloon is not providing the facility of tracking customer loyalty card by identifying customers through either name or mobile number which leads to customer dissatisfaction Loyalty card helps in identifying individual purchasing and repurchasing CRM helps in implementing customer development by cross selling and up selling of data as well as giving discount like Friday discount and birthday benefits to enhance customer relationship. Once the customer builds the habit of redeeming points, there is a higher chance of repurchasing from the same store