What is fashion CRM?

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:

http://en.wikipedia.org/wiki/Customer_relationship_management

Their definition owes much to the work of my old friend Professor Robert Shaw who has written some good books on the topic, such as ‘Marketing Payback’.

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:

  1. Customers you haven’t seen for a while (split by gender)
  2. Customers who dabble but aren’t the major spenders (again, split by gender)
  3. 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.

 

Retail advertising on social networks: What are you forgetting?

I’ve just finished a customer acquisition campaign for a retailer and we had a little budget left over, so I decided to have another look at advertising on Facebook. The budget wasn’t huge so we started to get really specific about who we wanted to reach, so the total spend didn’t creep up too high.

Facebook advertising

So, I limited the campaign to a specific town and then limited it further to target by interests too.

Facebook targeting

Then finally, I set the maximum daily budget and limited the amount I was prepared to spend for each click. Then sat back and watched what happened.

Facebook Campaign

I thought I’d share this tale because I was pleasantly surprised by the response. And everyone I know in marketing likes a good case study, so they can compare the results from their campaigns. It made me think that it would be worth taking Facebook advertising more seriously and building it into future marketing budgets.

Results:

  • Like’s, Comments and Shares 2%
  • Clicks 10.7%

I was fairly surprised by the clicks, but it gets more interesting when you look at the costs:

  • Cost per advert view (impressions): £0.005. I’ve included all the organic views in here too (12%), which we didn’t pay for.
  • Cost per click-through: £0.046
  • Cost per new customer: £1.02

Although this was on a smaller scale than the main campaign, the metrics were comparable.

Is this typical? I’d be interested in hearing from other retail marketers, especially in the luxury sector. It does make me think how relevant targeted advertising on Facebook might be for all sorts of businesses.

I’ll try to check back in again here with the results of the next campaign. I’m also going to try advertising on FourSquare too; I don’t think they have the volume to make a huge impact, but the metrics might add up for diverting that spare marketing budget, once again…

Abercrombie: what a hole!

If you haven’t heard the story yet, here’s a quick recap…

The CEO of Abercrombie and Fitch, Mike Jeffries was quoted back in 2006 in an interview with Salon magazine, ‘In every school there are the cool and popular kids, and then there are the not-so-cool kids,’ ‘We go after the cool kids. We go after the attractive all-American kid with a great attitude and a lot of friends. A lot of people don’t belong, and they can’t belong. Are we exclusionary? Absolutely.’

Mike Jeffries, Abercrombie CEO

Mike Jeffries, Abercrombie CEO

Abercrombie and Fitch are then suggested by some retail observers to attempt to reinforce this policy by refusing to stock XL or womens sizes above a US 10.

This story finally went viral last week on Twitter and the blogsphere when a Los Angeles-based film maker, Greg Karber, posted a documentary on Youtube suggesting Abercrombie & Fitch also destroyed factory seconds rather than make them available for the homeless as they didn’t want to devalue their brand. Karber proposes action be taken and A&F clothing be donated globally to the homeless and become known as the brand of the homeless, promoting his very own #fitchthehomeless campaign It’s an interesting idea and worth a look:

The video has received over 6 million views within a week and the suggestion of affirmative action has been picked up by many, including Kirstie Alley and Jeffries’ comments have received a fresh burst of coverage from The Guardian and, naturally, the Daily Mail is outraged.

So, I’ve been thinking all week- if you’re Marketing Director of a retailer like Abercrombie in this position, what’s your next move? This could have a really negative impact on sales. The CEO asks you to get them out of this hole and what do you do?

  1. Resign because your ethical values aren’t in line with the business – I bet this is one that has been considered, by more than one employee. It’s a rather brave choice given market conditions and I’m more interested in what retail marketers might do if they wanted to keep their jobs:
  2. Launch a new Corporate Social Responsibility programme that assists the homeless in some way that doesn’t provide them with clothing, and then pretend it’s something you have had in place for years
  3. Persuade the business to back down on sizing policies and launch a new outsize range, eating humble pie
  4. Draft a formal apology from the CEO that his words were taken out of content and that you’re a supporter of many inititatives for the homeless or for individuals with weight difficulties. This is one action Abercrombie decided to take in a statement to the Los Angeles Times, but without making any apology or reminder of their charitable initiatives
  5. Find a few outsized celebrities willing to endorse your brand or better still, wear your heavily-branded clothing, and not in an ironic way either.

So, I’ve been thinking all week, and haven’t found a good solution. What would you do?

The agony of fashion

I’ve had this book at home, propping up a TV cabinet on an uneven floor for as long as I can remember. I guess from the illustration on the front (and the title) that it explores the physical pain women had to suffer through the ages to keep up with the latest trends.

The agony of fashion

The Agony of Fashion, by Eline Canter Cremers-van der Does

I know the author, Eline Canter Cremers-van der Does (I just had to share her name- I bet she doesn’t get tweeted about very often without abbreviation…) was probably focused on the varying degrees of suffering induced by corsets, girdles and the garments of the nineteenth century and earlier, but I’m afraid I can’t give you a book review here; if I moved it right now, everything above it might collapse.

So I’ve been sitting here thinking- it’s been a while since I’ve written anything for my blog… I wonder what fashion brands are finding most painful in this century? What can us marketers do to ease the pain?

The agony of the high street

Much has been written already about the death of the independent store and the subsequent death of the high street and the move of fashion retail to out-of-town retail parks and new shopping centres with prohibitive rents. Large fashion chains and supermarkets deny this is happening (of course) whilst the independent fashion boutiques feel the pain. I walked down Kensington High Street in London briefly last week and although there were a couple of interesting new stores since my last visit (welcome to The Kooples) the opening of the Westfield Shopping Centre has clearly had a negative impact…So what is the marketing cure? Well, much has been written about this, and hopefully some of the answers can be found in the recommendations laid out in the Portas Review. I don’t think the solution is a simple one. I might come back to it if I have a long flight coming up that gives me the time this topic deserves.

The agony of aging

What other pain are fashion retailers suffering that we might find a remedy for? I’m going to guess one day soon, sleepless nights will be caused by age. Some brands have already realised this, while others are quite simply in denial. Their customers are getting older.

On the face of it, this might not seem such a bad thing; a 50 year old Vivienne Westwood customer has a greater chance of being able to spend liberally on the latest collection compared with a 30 year old. But if total sales have stayed the same, that places more of the influence in the hands of a smaller group of customers, and if sales have dropped in the last twenty years, the picture is even more serious; the risk-profile has increased.

As these younger followers are growing older, some of the brands I’ve observed haven’t replaced this customer group – the leaking bucket needs to be constantly filled up, if that makes sense. Not tackling this issue now will surely lead to real agony in the future.

There are brands that used to be serious names in the fashion world that are beginning to lose their current relevance and being confined to a moment in history.. I was thinking about naming a few names, but with so many earning such a large chunk of their revenue from fragrance sales and high street capsule collections (based on their past glories), it’s easy for them to argue they are stronger than ever. I’d suggest otherwise.

So how do you attract a new young audience to your brand? Here are a few pointers:

  1. Hire a great new designer to take a radical new approach. Cue J.W. Anderson with his new collection for Versus (launching in just a few days) to give Versace a boost. Also Hedi Slimane has achieved great things at Saint Laurent turning around their ailing brand.
  2.  Partner with the new kids on the block.I’ve been looking at an alternative (and cheaper) solution to the first idea- simply turning it on its head: Introducing some of the old school designers to younger brands. Imagine Vivienne Westwood designing for YMC (You Must Create) or for Folk Clothing and you’d get an idea what I’m talking about. Then, if this capsule collection came with an offer of ‘something special waiting for you in a Westwood store’, the Westwood retail team would have the opportunity to give the young potential customers the ‘brand tour’ on their own turf. I’ve yet to see this done well and I’m itching to give it a go.
  3. An annual event, dressing the emerging bands to introduce their fanbase to the fashion brands. I was thinking about this concept in the car today and then remembered the cringeworthy Fashion Rocks – for MTV and running from 2003 to 2009. That’s not what I had in mind! I remember the bands trying to interact with the models on the runway and it not really succeeding. Mind you, it did raise around £1m a year for charity. I thought putting a whole host of bands on stage, dressed entirely by a named designer would be an interesting approach to the leaky bucket.

The social agony

Finally, I’d like to guess that fashion retailers are still trying to reconcile their spend on social media with their online revenues and this is causing more than just a few of them sleepless nights:

  • Does growing Likes on Facebook convert into sales?
  • Should I continue paying for my brand name on Google advertising or should I expect customers to find it naturally?
  • Should I really monitor all references to my brand on Twitter?
  •  Is it worth investing time in Instagram and Pinterest?

I’d suggest with a move towards bringing editorial in-house (Matches, Net-a-porter etc), some boutiques are starting to understand that creating editorial content (which is in part driven by the bloggers) does more to drive sales and that the Facebook Likes, instagram images and Pinterest pins are a by-product and a measure of the success of this strategy rather than the solution.

The Agony of Fashion, Cover.

The Agony of Fashion, Cover.

Easing the pain

There are many agencies out there offering instant relief through their own unique medicines, such as search engine optimisation, social media monitoring, content generation and even the classic cure of Public Relations. Many of these medicines are untested and it’s only after time and testing that we’ll really understand if they were a success.

I find that the more I spend time working in fashion retail, the case study from a specialist is highly prized: have you done it before, what did it really cost, and can you prove it worked?

If you’re suffering this year, I do hope it’s not for too long.

Luxury retail: digital marketing trends for 2012

If you’re wondering why you haven’t heard from me, I’ve just got back from a ten-week trip around the globe. And if I’m honest, I would probably describe it as an ‘extended vacation’ as I’ve spent more time on the beach than on my Mac.

However, one of the projects I have been working on is to help put together the digital marketing strategy for a luxury retailer. What they were looking for was an insight into what everyone else is doing in 2012 to generate sales online and my thoughts on whether they should adopt the same approach themselves.

My observations might be useful for other brands, so I’ll share a selection with you:

Retailers must have more Klout

Have you come across Klout yet? It’s a free tool that measures and monitors your influence across social media and gives you an indication of how you use the various social media networks. It then generates a score which you can compare against your peers.

The Marketing Audit: Mothercare

BACKGROUND

“Congratulations Mrs Morris, you’re three month’s pregnant”

said the Doctor, and promptly handed us a ‘Pregnancy Information Folder’ from the Bounty Parenting Club.

“That’s fantastic news,”, I thought, “one of the happiest moments of my life; there’s a type of loyalty programme I haven’t seen before.”

Luxury Retail experiences: My top 10

Last week I was meeting a luxury retailer for the first time and they asked me what my ultimate retail experiences were. We got into a conversation about modern luxury not necessarily equating to spend and I shared details of a couple of stores I’ve visited that have impressed me where I haven’t had to blow the budget. But a top ten? That’s tricky. Here goes…

Turning retail data into insight.

For anyone working in the vibrant world of retail marketing, data is perhaps the dullest topic to read about. It’s just as tough for me to sit down and start writing about it.

Dudley snoozes

Dudley's not interested either.

In fact, if I want to keep my blog on marketing ideas exclusive, I just have to mention data and that should keep the readers away. The evidence from market research supports this too

Retail recession marketing: what’s working?

Let’s not deny it; 2011 was a tough year for most of us in retail marketing. And this was for good reason. Many of the tried and tested activities that we used to have ready to rollout just didn’t have the impact we would expect. We saw some retailers discounting their products heavily, only achieving flat year-on-year sales at best. 

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