This week I’m going to answer a question I’m asked almost every week…
“What is fashion CRM?”
There are many great definitions of CRM online, perhaps none better than that provided by Wikipedia:
However today, I’m going to look at this from another angle- and “interview myself” with the general questions I’ve been asked most recently:
What does CRM mean for fashion marketing?
My take on CRM for fashion is that it encompasses the tools and techniques that enable a fashion retailer to understand their customer’s behaviour better and communicate with them more effectively, perhaps through some targeted activities that don’t communicate with all customers in the same way. CRM recognises that fashion retailer’s customers each have different requirements and therefore fashion marketing should reflect this.
I’m a fashion retailer. What does that mean for my marketing team?
I believe CRM enables the retailer to begin relationships with each of these customers in a segmented fashion.
Perhaps on the simplest level, we can communicate with customers differently depending on
- How recently they shopped (Recency)
- How often they shop (Frequency)
- How much they spend when they shop (Monetary Value)
This type of targeted activity is usually described as RFM or RFV segmentation.
Imagine your weekly campaigns changing, so that rather than sending a generic editorial update to all your customers, we think about designing 6 or more weekly campaigns:
- Customers you haven’t seen for a while (split by gender)
- Customers who dabble but aren’t the major spenders (again, split by gender)
- Your best customers (yes, you’ve got it)
Each one of these campaigns has a different goal so the messaging and imagery can be quite different. For example, you might like to tempt the low-spenders into a higher-value purchase with a short-term offer, and wrap some appropriate imagery around it.
As the customer database grows larger, the ability to refine your marketing messages more continues to grow.
We’re already sending segmented campaigns. What next?
I believe for most fashion brands, their customers have a product-purchasing journey. This starts off with an experimental purchase of something typically low-value but iconic, and then starts to move towards more items that are more recognisable as wardrobe staples. With most brands I’ve worked with, I can usually establish some signature purchases which identify a new customer is likely to become a lifetime customer and therefore is to be carefully nurtured.
Once we’ve identified these signature purchases, we can gently encourage new customers to make these purchases to rapidly convert them into lifetime customers.
Where should I begin with Fashion CRM?
Analysis of all your historic customer spend, including their profiles and purchasing history usually identifies some areas that would be best focused on:
- Are your customers regularly returning?
- Are you a global brand?
- What is the demographic profile (by this we typically mean age, and social class) of my best customers?
- How much do your customers spend?
- Do most customers hang about waiting for you to go on sale?
The conclusions from this analysis allow you to put together a marketing strategy with a bit of CRM science behind it.
What does social media mean for our CRM activities?
Social media does provide you with more information about your customers and their behaviour. The challenge for most fashion labels is this information not being connected to the marketing and CRM systems so social media quite often becomes a separate channel of generic activities rather than a tool for some clever targeted marketing.
Social media gives you more channels to send targeted communication with your customer. However it is important to broadcast the right message on the right platform or you can pretty quickly start to devalue your reputation via these emerging channels. Work out what your ‘tone of voice’ and ‘attitude’ is going to be on social media. What messages go our on each platform. Should your own images of new products appear on Pinterest and Instagram, or should they simply carry images customers share with you of them wearing this season’s collection? The brands that get this right are enjoying rapid growth.
What CRM systems should we look at?
The industry leaders in CRM systems are SAP, Oracle, Salesforce and Microsoft Dynamics. There are other systems out there that integrate neatly with e-commerce platforms. Recently I’ve been impressed by the CRM functionality within Shopify at the basic level, Magento for smaller fashion labels trading in the digital space and for the premium players, Demandware. Venda and Visualsoft have also given me sufficient tools to run effective CRM activities too.
How does CRM impact luxury brands?
If you’re marketing a luxury label, I strongly believe that CRM becomes an essential part of your marketing toolkit. Luxury retailers are faced with the basic challenge that many tried and tested marketing activities can’t be utilised without impacting the brand. Communicating with the customer base can’t be too frequent, or too demanding. Therefore knowing that little bit more about your customers gives you the opportunity for very gentle and almost non-commercial communication. Segmenting these customers into groups by “opportunity for growth” makes your occasional email campaigns more relevant and therefore more likely to be successful.
What results can we expect from CRM?
There used to be a general rule of thumb to forecast your results by. In the days when Tesco Clubcard was one of the world’s leading loyalty programmes, it was generally believed that a good loyalty programme, supported by relevant CRM activities, increased revenue by between 2% and 4% and cost around 2% of turnover. I’ve been involved in programmes achieving 6% and beyond, but I wouldn’t say that is possible for everyone.
I’d say that the smarter you get with CRM and the more targeted the campaigns become, the better the results, if you have a reasonable sized database to start off with.
I’ve recently been working with a retailer on their CRM activities where the brand forecast a customer response rate of 4% to our campaigns, generating a return on investment many times over. I’d say the 4% is ambitious, but achievable given the right circumstances. We managed to achieve a 25% response rate with one particular campaign, but the targeting was highly specific and the campaign required some detailed planning.
I’ve seen another retailer increase sales through CRM of a particular product line by 415%, but again, I tend to remember the exceptional campaigns rather than the more predictable ones. How did they achieve 415% growth? By offering relevant products to a highly targeted audience with well-executed creative and good copy-writing. They effectively created a sense of urgency for purchase and a desirability that simply couldn’t be ignored.
The best way to forecast results from CRM campaigns has always been to base them on your own previous campaigns. I maintain a file of all the campaigns I’ve designed over the last 10 years so I know what I’m likely to achieve with my next ones.
How can I track results? How do I know it’s working for me?
Many CRM systems have inbuilt systems to help you measure return on investment. This is much easier if you’re retailing online as the eventual purchase can be associated with the original campaign. I’d suggest putting some simple Key Performance Indicators in place and watch them as you begin your CRM activities. Always hold back a control group from receiving campaign communication, so you have a base behavioural point to compare with. If your offer is to tempt customers into your high street stores, ensure the method of redemption has something that can tie the retail transaction back to the particular customer and the particular campaign.
Is there any point in CRM?
There’s an obvious answer to this question, given that CRM is a specialist subject for me! However, I would say- if you own a very small label with less than 5000 regular customers, there are probably other areas of marketing that would do better to receive your attention than CRM.
If I have left your questions about fashion CRM unanswered, let me know by commenting on this article or emailing me and I’ll share my answers with all subscribers.
(Featured Photo by Nicole De Khors on Burst)