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Building one-on-one relationships

This article appears in the issue Nov/Dec 2000 [Volume 9, Issue 9]

New business intelligence and other knowledge management technnology is enabling retailers to get to know their customers better than ever, while allowing them to offer personalized attention ... no matter how large the business.

You don't have to be a global conglomerate to use and benefit from sophisticated technology. And you don't have to be a retail giant with stores worldwide to gather information about customers and use it to your advantage.

In Connecticut, two upscale clothing stores are using KM to help salespeople best meet the needs of customers. Mitchell's of Westport and Richard's of Greenwich are small, family-owned boutiques that specialize in selling high-end apparel and accessories. To compete with mass market retailers, the two stores have turned to business intelligence technology from IBM to build a database to better understand customers and facilitate personalized marketing.

With more than 50,000 active customers, Mitchell's uses the system, which applies analytics to customer and sales transaction information, to give customers individualized attention just like they have received when the store opened in 1958.

According to CEO Jack Mitchell, the store has embraced the concept of using customer information to improve service ever since its founding, and its association with IBM goes back years. As the technology has improved, Mitchell's has enhanced and upgraded its software.

The IBM system actually contributed to Mitchell's decision to purchase the "sister" store, Richard's. He was confident that the business intelligence system would help both establishments control inventory by purchasing the right product at the right time and byraising the margins.

The name of the customer and what he or she bought is collected into the system and used for future mailings. If a customer purchases an Armani suit, for instance, Mitchell follows up with a letter expressing pleasure that he shopped at the store, reminding him of the date when the suit can be picked up, and offering other pleasantries to show the customer that he is appreciated. When the store plans a sale on Armani clothing, that customer is automatically notified of the date.

Mitchell says that personal attention makes the customer feel "warm and fuzzy" and fosters the friendly atmosphere of a mom-and-pop store.

"We're building relationships," Mitchell says, "not transactions."

When a customer shops at Mitchell's or Richard's, sales associates access in-depth profiles from any of the 40 computer terminals located in the 25,000-square-foot store. There they gain a good understanding of the customer's preferences and needs, including size, colors and spending level, and immediately direct the customer to certain apparel items based on those criteria.

The business intelligence system also tracks birthdays, anniversaries and other special occasions for customers who supply the information. The store even sends them reminders. For example, a husband will be alerted to his wife's upcoming birthday. When he phones or visits the store, a sales rep recommends an item consistent with his wife's tastes, or, going one step further, the rep suggests that the husband purchase the floral silk blouse that coordinates with the beige slacks and jacket his wife bought the previous month. Based on her previous buying behavior at the store, his wife will probably like the gift and find that it fits.Besides helping sales reps in the store, the customer data can be used to define marketing and promotional strategies. When customers have shown preferred loyalty to a particular brand name, like the Armani customer, the store can make sure that the customer is mailed materials promoting that designer. One personalized mailing using the information in the database resulted in $314,000 worth of sales.

The customer intelligence system has "dramatically increased our business," Mitchell says, adding "millions and millions of dollars" in sales.

The information contained in the database is voluntarily shared by the customers, who seem to love the personalized service, Mitchell says, and none of the information is sold to other businesses. In fact, of Mitchell's 50,000 customers, only 50 or so have rejected the idea of receiving phone calls or mailings from the store, according to its CEO.

A more personal experienceAt the other end of the retail spectrum, Borders Group Borders Group, a global retailer of books, music and videos, is deploying new software to foster one-to-one relationships with customers online and in its more than 300 stores in the United States alone.

Borders is using data integration software to create a more personal experience for its shoppers, not unlike the strategy Mitchell's employs. Informatica PowerCenter will consolidate customer-related information from multiple databases across Borders into a centralized "customer intelligence" warehouse. The information, which customers supply voluntarily, builds profiles that help customize the shopping experience around customers' particular interests.

"The ability to gain insight into our customers across all retail sales channels," says Greg Josefowicz, president and CEO of Borders Group, "will be instrumental in establishing one-to-one communications that help foster stronger, long-term relationships with our customers. Our customer intelligence project represents an important technology initiative."

Helping franchiseesAnother large retailer,Mail Boxes, Etc. is using a different type of software solution to improve its business. Mail Boxes Etc. has more than 3,500 domestic, franchised sales centers where postal products and services are sold.

Before developing a new self-service, Web-accessible knowledge database, the company used a basic call tracking system to handle the hundreds of phone calls to its corporate offices in San Diego. The calls were from franchisees who were seeking technical or operational advice. The corporate support representatives who answered the calls had no knowledgebase or information-sharing system to consult, no systematic way to direct calls to the right people, and no method to collect feedback about whether callers were satisfied with the answers they received.

The new knowledgebase system, developed with the help of Norstan Consultingand based on Lotustechnology, supplies answers to most of the franchisees' technical support questions, and includes a help desk that accepts cases for further investigation. Called MB Help, the system is designed for internal use by franchisees.

According to Ray Causey, VP of technology and CIO at Mail Boxes Etc., MB Help consists of two major elements: the knowledgebase, a repository of frequently asked questions, and the support system, which was initially developed around technical questions, but has since grown to include operational, "learning" and accounting issues.

A franchisee, for example, might ask MB Help, "How do I do end of the month accounting?" He or she would be referred automatically to MBE's Learning Department which in turn would suggest a video or training course to bring the franchisee up to speed in end-of-the-month accounting.

According to Causey, the new system works quite well. Automation allows the company to disseminate information to the appropriate discipline and person, and nothing gets lost.Mail Boxes Etc. predicts that users by themselves will be able to resolve about 60% of the problems that used to prompt 200 to 300 calls to tech support each day. Typically, backlog for unresolved issues was 850 calls, and average turnaround time was three weeks.

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