The days when a new product could expect to establish and maintain a market monopoly by attracting and keeping a loyal customer base have passed. In a complete turnaround, marketing professionals now face the constant challenge of collecting data to promote products and devise novel strategies to keep customers from straying away.

As a result, retailers are focusing on customer loyalty as a vector of profitability and are investing in the former to improve the latter. Bottomline profit is relatively easy to measure, but enterprise and ingenuity is needed to measure loyalty.

The paradigm shift toward the idea of customer loyalty or “ownership” has given a new importance to customer relations management (CRM) where the customer is “owned” at corporate level and has been moved away from the departmental and retail outlet level. To achieve successful CRM, information from the point of contact with the customer should be automated and a corporate philosophy encouraged that collates and coordinates the interaction between a corporation and its customers across all its customer contact points. To achieve this, businesses need to develop the necessary plans, processes and technologies to gather information and support customer relations.

To be effective, CRM policy within an organization has to make the subtle distinction between a satisfied customer and a loyal customer. The two ideas are not mutually exclusive. A satisfied customer may purchase from a company only once, whereas a loyal customer, who is clearly satisfied, does so more than once and may introduce new business. Retailers who don’t see the difference lose prospective sales.

The retail industry is in the early stages of adopting CRM as a key business strategy, most of them being at the stage of evaluating its usefulness. Gartner puts retailers evaluating CRM into three categories:

Type A enterprises, less than 10 percent of the total, are both technically aggressive and well funded, with IT used to gain the competitive edge.

Type B, who are the majority, have adequate funding and use IT to support productivity.

Type C, however, tend to be conservative and seek to control IT costs and therefore limit usefulness.

In a relatively short time, CRM has become an established technique because it fulfills two of the retail industry’s most critical needs. It helps understand customer’s buying habits and yields improved customer information across the organization.

Currently, CRM is mainly acknowledged at senior management level, but to make it really effective, it has to become part of corporate culture throughout the organization and most especially at retail outlets.

It is fortunate indeed that CRM is developing at a time when the retail industry is experiencing some anxiety over its future. With the advent of global and local competition, the increase of direct selling by manufacturers and the increase of hybrid distribution channels — the Internet for example — retailers are investing in new technologies to accommodate increasingly sophisticated customers.

Consumers are responding to the development of technology and the new methods of purchasing that it offers. Changes in population profile and new attitudes to online shopping have combined to create a challenge to the traditional methods of shopping. The shift away from retail outlets toward catalogue and web shopping is forcing retailers to change their focus from “product-centered” service to “customer-centered” service. Retailers who hope to survive in this changing environment know they must communicate with and establish feedback from their customers through the new retail channels to re-establish intimacy and promote loyalty. As a result, customer service rather than product is establishing a high profile.

Some retailers have used CRM to access the synergy created by combining stores, kiosks and the web to revitalize their sales. The majority have as yet not achieved this, but the retail industry is poised to adopt CRM as a solution.

Soon, the market leaders that use CRM will be promoting, merchandising and marketing across all the available sales channels. Their aim will be to present a consistent image or company face to their customers and identify valuable consumers, recognizing the value of a lifelong customer over the one-off purchaser.

The successful retailer will be the one who re-examines his approach in the light of customer expectations, honestly assesses his strength and weaknesses and rebuilds his approach tailored to what the customer wants.