Live from NCDM: Sears’ CRM Journey

(Direct Newsline)—In 2001, after years of pushing products and services at its customers, Sears, Roebuck & Co. began a “customer relationship management journey,” according to Kristine K. Crow, the Hoffman Estates, IL-based retailer’s senior vice president of Sears Financial Services.

This is a new title for her: She had been VP-customer relationship management in 2001, when a senior-level executive looked at the state of the company’s customer focus and declared “We have lost touch with what consumers want from Sears.”

For Sears, rededicating itself to CRM was an ongoing process begun in 2001. Changes wrought have included everything from improving its merchandise mix to creating new pricing strategies for its home electronics to overhauling its apparel offerings, and have primarily affected its retail operations, although its recent direct mail activity has reaped some of the benefits as well.

Back in 2001, the biggest change Sears made was to centralize CRM as an asset across the enterprise. As management realized, customers weren’t differentiating between the store operations and the person who came to their home to fix a broken appliance, even if these activities were coordinated by entirely separate divisions.

In the first year of her journey, Crow “devoured every book on CRM I could get my hands on,” as she put it. But a lot of them preached higher-level analytics than she was ready for: At that point, she was more concerned with modifying product mix based on understanding customers’ needs, behaviors and attitudes.

Her group quickly earned a reputation as being willing to help any facet of Sears that wanted to work with it. Fine jewelry might not have been a primary business for the company, but Crow knew that their willingness to explore CRM would result in an internal “case study” that would swing the opinions of the larger, more entrenched operations.

Within the program’s second year, Sears developed its CRM business model, which held as its goal making sure that every business decision, whether made in 30 minutes or 30 months, was made based on meeting customer needs profitably, and that those decisions are re-evaluated over time, as appropriate.

It was also during this time that Sears asked three key questions about its CRM practice. The first, which dealt with defining the CRM program’s focus, was answered by ensuring that its full-line stores (as opposed to ancillary operations such as its direct-to-consumer business or financial services) met and exceeded customer expectations. The company worked to improve the overall customer experience before it moved on to higher-level marketing strategies.

For instance, the company also modified its in-store experience based on customer desires. The changes it made included widening the aisles in its children’s sections to better accommodate strollers or shopping carts, and better delineating the sections where specific types of clothes—husky sizes, toddlerwear, basic boys’ and girls’ apparel—were kept.

Once it had accomplished this, the chain made a commitment to develop a single, multi-dimensional data model to define its targets. It analyzed the pre-purchase, purchase and post-purchase customer experience. This included assessing customers’ likely need for its products and how they researched these products, analyzing customers’ browsing patterns, and how they completed the transaction, and how they took delivery of the product, had it serviced, were billed for it and ultimately disposed of it.

By breaking the purchase cycle down based on this data, Sears was able to deliver better-targeted marketing to its customers.

Finally, it strove to embrace customer insights by taking an end-to-end view of the customer’s experience.

The successful focus on its customer was instrumental in the company’s heightened use of direct mail. Its 2002 mail quantities were 8% higher than the previous year, and in 2003 those quantities jumped another 23%. The company’s faith was rewarded: Its incremental sales rose 17% in 2002 and another 45% in 2003 as it refined its models.

While Crow views the jump in sales as very rewarding, the biggest attagirl she received was when the company’s president told her “We are not going to make a single move unless you tell me the customers are going to like this.”

Crow shared her experiences during a keynote presentation at the National Center for Database Marketing Conference in San Francisco. The conference ended Wednesday.