The Customer Relations Management of Macys Inc - Term Paper Example

The Customer Relations Management of Macy’s Inc. Executive Summary The Corporate Objectives of Macy’s must necessarily include financial goals. These were defined in the 2012 Annual Report as follows: (Source: Macy’s Inc.A. 2012 Annual Report Corporate Factbook.p. 5 Viewed Niovember 1, 2012 @ http://www.macysinc.com/Assets/docs/for-investors/annual-report/2012_fact_book.pdf ) Good financial performance is always crucial for the maintenance of the level of operations that provides for the entire organization in order to cover for the costs and expenses yearly. Thus, the problem of how to achieve all these objectives should be answered in the planning stage for the following year. Overall objectives and the overall problem is then broken down into workable specific objectives per division and per department then down to the per individual performance. Of all the problems and objectives, Macy’s gives high priority to customer relations, having leaned through over 150 years of experiences that the direct source of revenues come from the customers of the business. The key problem is how to maintain the loyalty and patronage of millions of customers with diverse cultures, in many different locations, with a variety of needs, wants, preferences, knowledge, and so on. Macy’s 2nd key problem is how to increase the competitiveness of the company in order to win more customers who will patronize Macy’s products. And the 3rd major problem is how to evaluate whether or not the company is on the right track towards satisfying customers enough to maintain loyal customers and win new customers. Not all can be resolved by customer relations because product developments and technology also make a difference in customer decisions. This paper will focus on the roles of customer relations management as a vital means to achieving desirable objectives for shareholders, management and employees, and for the customers of Macy’s. Situation Analysis A. Value of CRM For Macy’s Inc., loyal customers have made the company an ongoing, lively, and rewarding organization of people and business systems since its start way back in 1858. Its founder, Rowland Hussey Macy, opened what used to be a dry goods store along #204-206 6th Avenue and also at the 14th Avenue. In 1862, his stores made what others saw as an innovation in a way to attract customers. He placed Santa Claus in his stores and advertised the message: “What do you want for Christmas?” (Macy’s Inc. 2012-A). The strategy reflected the value of customer relations over 150 years ago. It recognized that people valued the occasion of Christmas and celebrated it with gift giving to others. And importance was given to what people want for the special occasion. Furthermore, the message probed the public for what they wanted knowing people celebrate Christmas with buying what they need and want. Customer relations is about knowing what people value, what people want, and providing both in a pleasing way. Without such customer relations, how can the business compete with other similar stores with similar products? Without sales, owners will not earn profits. And soon, without profits to cover for expenses, the business is doomed to close in the absence of good customer relations that draw people to voluntarily see and appreciate products on sale. The focus on customer relationships leads to competitive advantage and creates the value of a company. Especially for the retail stores of Macy’s, Inc., the theoretical aspects of customer relationship considers the objectives of (a) acquiring profitable customers, (b) retaining customers worth dealing with, for as long as possible, (c) winning back such profitable customers, (d) parting ways with troublemaker customers, (e) selling products needed by profitable customers, (f) getting their referrals, and (g) being able to sell products to them at the least cost and expenses. (Peppers, D. and Rogers, M. 2010, Chapter 1) From another viewpoint emphasized by Buttle, F. (2012, p. 186), customer relations management is supposed to “create and deliver value to targeted customers at a profit”. And so it can be seen that value creation is both for the company and for the customers, although it is by providing good customer experience with the company and its products that patronage of customers are able to add value to company shareholders. Thus, the perception of what gives value to Macy’s products will surely matter. This is determined by skillful gathering and understanding of information coming from the customers themselves. Down to the level of customer representatives, listening, analyzing, and properly responding will enable the company to know who values certain features and who don’t value such features, and why. Oftentimes, it is because certain features provide people some benefits. A pragmatic customer can have exactly the opposite preferences and values from an environmentalist. For example, environmentalists do not want businesses to sell animal fur knowing that some animals get killed in order to meet the needs of people who want to use animal fur. In contrast, the pragmatic customer feels comfortable with wearing animal fur regardless of where the fur comes from. At Macy’s, both cultures are served. But the customer representatives will certainly not offer any fur to people who tend to support environmentalism. Fur is offered only to those who are looking for them because they want to wear fur. Both Buttle, F. (2012) and Peppers, D. and Rogers, M. (2010) teach the need to acquire new customers, retain customers, and create value. But the former was more concerned about customer value while the latter was more concerned about company value by meeting customer needs. At Macy’s Inc., the fact that its management plows back a part of their income to customers and charitable organizations would tend to prove that the company wants to do both. Giving directly to customers and charitable organizations is an act that adds value to the customers and other members of the community. However, it is with the belief that by being generous and thoughtful to others, more people will patronize Macy’s. And so the company provides high quality, affordable fashion products to offer the best value per item. At the same time, Macy’s captivates customers to similarly believe in being generous to those in need of charity by attributing Macy’s generosity to the patronage of customers. The perception of value assumes every person wants to be praised and called generous or kind and thoughtful to others. B. How Macy’s Considers the Value of CRM By 1864, in order to attract prospective customers not only during occasions, Macy’s developed the front of its stores and displayed women’s clothes for all passersby to view. This was said to be among the first to introduce window shopping. Customer relations can begin by any sign of interest to buy something from the store, which Sales Associates should notice and react to in order to facilitate a customer to make a decision to buy. Again, the value of customer relations management becomes evident at this point because customers can easily change their minds and their interest unless somebody facilitates the entry and selection process of the customer until he decides what to buy. Because of the value of CRM to Macy’s as early as 1866, the business appointed Margaret Getchell as the first Superintendent. Her mission was to attract more customers. To do just that, she created a motto very useful to customer relations even up to the present. “Be everywhere. Do everything. Never forget to astonish the customer.” (Macy’s 2012 A) That motto took Macy’s a long way to progress through a series of expansions first in 1902 at 34th St. Herald Square occupying 9 stories and using 33 wooden elevators and 4 escalators; followed by another expansion to the 7th Avenue Herald Square in 1924, which built the World’s biggest store for Macy’s to occupy. It was not enough that Macy’s enlarged itself. In the same year 1924, the company added value to the people in the community using its resources to celebrate Thanksgiving Day with a parade of “live animals” coming from the zoo. It was also Macy’s who sponsored the first 4th of July fireworks celebration in 1974. Since then, there has been a yearly festival of fireworks up to the present although sponsored by other entities. In 1982, once again, Macy’s valued customer relations by way of promoting social awareness about AIDS/HIV and raising funds for the medication and prevention of that disease. People were made aware that Macy’s has been raising funds from then on until now, and was able to donate $ 22 million to help fight AIDS/HIV. Macy’s Inc. has online stores and nationwide retailers. Because of the variety of customers, the company must consider many types of customers with their preferences in order to provide every person with satisfactory shopping experience. To achieve its financial objectives (See Figure 1.), the company aims at winning customers and “strengthening customer loyalty” (Macy’s Inc. A. 2012, p.6). The economy was reported to be stagnant. And yet Macy’s Inc. kept improving customer services. One major objective therefore was to find ways and means to keep customers enthusiastic or interested in the products of Macy’s in 800 retail stores and online. Customer relations play a big part in fulfilling this objective. The customer service people of Macy’s communicate with customers through mobile devices. This is done by sharing fashion ideas and advices to customers. And they are being trained during a strategy implementation entitled MAGIC Selling. Even the Sales Managers are being supported with motivational tools, training, and other resources they can use to keep increasing sales. One tool is about the ongoing measurement of customer satisfaction using the Net Promoter Scores (NPS). Another objective was to improve the quality of customer relations in each specific store location. Macy’s implemented a strategy which was called “My Macy’s Localization” What this means is that every product and opportunity to experience the products at retail stores should be translated into the right way people in the locality would be satisfied. One right way is by offering each person the right product. This entails some research, skills in probing what a customer might be looking for or what he or she wants at the time of a visit to the retail outlet, and having customer service personnel quickly know the options to be offered based on the results of research or probing questions. In line with this strategy, the company identified priority market segments. The top group belongs to those in the age bracket of 13 to 30 A 3rd objective is to make it easier or more comfortable for customers to access the various choices of products. As early as 1997, Macy’s launched its online presence. Since then up to the present, Macy’s products have become more and more readily accessible with the help of the internet and the Worldwide Web, and by gradually enabling its stores to ship orders. Only 23 Macy’s stores had the option to ship orders directly to customers if ordered via internet and/or phone calls as of 2011. But the target number of Macy’s stores that can ship orders was increased to 230 by the yearend of 2012. By serving these objectives, Macy’s Inc. is turning problems into opportunities. The problem of having to serve a diverse set of people with a variety of cultures has become an opportunity for Macy’s customer relations management to inform the customers about the abundant choices for different people with different cultures. Also, to make that very possible, Macy’s has included manpower from a variety of cultures. As a result, the company can implement what it calls “multicultural marketing” (p.16). And to make sure Macy’s accurately convey the cultures for which products are meant to satisfy, its customer relations management coordinates with agencies owned by cultural minorities as well. And corresponding diverse suppliers are likewise being maintained to have abundant choices per classification of customers. Social responsibility towards the surrounding communities was also turned into an opportunity by Macy’s Inc.. It became an opportunity to satisfy customers with the knowledge that aside from receiving quality products and services from all the retail stores of Macy’s Inc., their patronage of Macy’s leads to some contributions to the local communities. Associates of the company gave 111,000 hours of their time to volunteer and render community services. Macy’s Foundation also funded charitable projects that amounted to $ 26 million in 2011 alone. . 4,500 non-profit organizations were said to have benefitted from such giving of Macy’s Foundation. Local communities also received $3.4 million grants. And 1,200 people received gifts from Macy’s. All these give a good impression on customers and even potential customers of Macy’s, a factor that will always favor good customer relations. There were scholarship programs, sponsorships to field trips or visits to museums, exhibits. Musical shows, and contributions to environmental programs. To furthermore appeal to the influential organizations and sense of social concern of the people, Macy’s supports advocacies like the maintenance and support of sustainable environment. The greater number of customers is within the age bracket of 13 to 30 years old. These are mostly students with energetic and dynamic minds. They believe in having an environment worth living in. Schools train them to think and behave responsibly to the environment. Thus, when Macy’s supports them, there is always a factor that can make them loyal to the company for the products sold by Macy’s. Description of Customer Retention Programs at Macy’s Inc A. Macy’s Strategy for Customer Retention Ranking # 110 in Fortune’s top 500 companies, Macy’s Inc. currently owns 840 stores and operates in 45 States in the USA, and in other countries like Guam, Columbia, and Puerto Rico. In 2011, its total sales reached $ 26.4 billion. (Hoovers 2012) Macy’s Inc. has online stores and nationwide retailers. Because of the variety of customers, the company must consider many types of customers with their preferences in order to provide every person with satisfactory shopping experience. To achieve its financial objectives (See Figure 1.), the company aims at winning customers and “strengthening customer loyalty” (Macy’s Inc. A. 2012, p.6). The economy was reported to be stagnant. And yet Macy’s Inc. kept improving customer services. To retain customers, the company has continuously been practicing the strategy of keeping customers astonished, enthusiastic, interested, and aware about the fashion products at Macy’s. Its system consists of gathering information about customers’ needs, wants, preferences, cultures, in order to have and to offer what people want for their alternative fashion designs. Each of its retail outlet manpower is trained to gain awareness of their local prospective customers, and to be ready with offering them what they are looking for. Furthermore, Macy’s believes in customer relations wherein a part of the income is shared to communities to keep people aware of Macy’s presence and value to the community and, at the same time, to fund charitable and/or civic projects. There have been many customer relationship initiatives by this practice and implementation of funding projects for the benefit of communities and people. Hereunder are just the names (without full description) of those funded projects which Macy’s classified as part of its customer relations over the years: 2008 – Corporate and Foundation Giving to 5,000 non-profit organizations = $ 31.5 million; 2008 – Donation to Make-a-Wish Foundation = $ 1 million; 2008 – Gifts to customers = $ 32.8 million; 2008 – “Go Red for Women” project of American Heart Association = $ 3.5 million; 2008 – One day “Shop for a cause” (for local, regional, national non-profit orgs. = $ 9.1M; 2008 – Thanks for sharing holiday gift rewards = $ 14.7 million; 2008 – Back to the Books fnds for multicultural families = $ 3.2 million. 2008 – Matching Gift Donations = $ 4 M from employees + $ 4 M from the Macy’s Foundation; 2008 – A total of 150 grants to to schools for the “Earning For Learning” program = $68,000; 2008 – United Way Project = $ 12.4 million from associates + $ 3.9 million from Macy’s. For over 20 years, there has been the project known as “Partners in Time” which contributed $28 million worth of community projects through the time and voluntary effort of its employees. In 2008 alone, Macy’s was able to guide its 60,000 employees to serve 3,500 civic projects free of charge. This included raising funds to provide food and to alleviate hunger. Very recently, September 5, 2012, Macy’s Inc. was able to raise funds through the generosity of its customers. In just one day of shopping event called “shop for a cause” to raise funds for a non-profit organization that helps mother and babies, Macy’s raised $ 4 million. The project has been taking place yearly for the past 7 years. Total funds raised have reached $ 46 million. And it is said that thousands of charity groups benefited. Macy’s Inc. takes the event as an opportunity to thank its customers for their generosity. The idea is to make customers feel that through Macy’s Inc. they have done something good for the community. Thus, if a person happens to be a customer of Macy’s products, he would feel proud of being such a customer because people would associate Macy’s customers as people generous to charitable causes. As of the latest, November 2, 2012, Macy’s targeted $ 1 million fund raising for the victims of Hurricane Sandy. And so, in just one sample year, it can be seen that Macy’s Inc. spearheaded the kind of customer relations which gave time, effort, and money for those in need and made its customers aware that they made the generosity possible through customer loyalty and patronage of Macy’s products. All these were on top of directly business-related effort to provide high quality products, to serve the needs of customers in retail stores, to maintain and provide innovations to available fashion supplies, to regularly communicate to customers via text messages and face-to-face contacts. B. Examples of Customer Service Customer Service for Cross-Referencing between small business units (SBUs) were made possible by information technology linking documents of all parts of the Macy’s organization. This has made it possible for one retailer to access files from a database covering the whole of Macy’s. For example, under its online Customer Service webpage, Macy’s allows for order tracking and the location of stores wherever a regular customer might be relocated or assigned. For information about customers, associates can try searching the database of Macy’s Inc. so that the customer representative will have an idea about the way to meet customer needs and wants based on customer profile. Macy’s has Credit Services and therefore maintains records of those with credit lines. If a customer has a credit line, all the ourchases of that customer can be charged to his or her account. The Sales Force provides Customer Service by following the three strategies defined by the management of Macy’s. These strategies are (1) Localization Initiatives Strategy, (2)Omnichannel Integration Strategy, and (3) Magic Selling Strategy (Macy’s Inc. D 2012) Specialty Sales representatives, following the Localization Initiatives Strategy, identify the person who should be informed about the fashion products of Macy’s depending on a profile. If the local profile shows the customer has a culture belonging to the African-Americans, then the products that will be offered will be those appealing to the most recent fashion designs for the African-Americans. They can inform customers about available new choices viewable online, using emails, social networks, and even text messages, Face-to-face customer relations take place when people enter one of the over 800 stores of Macy’s. To make the Sales Associates effective, the sales force is trained and developed to understand the needs and wants of customers through the Magic Selling Strategy. Telephone calls are appropriately done. Customer service personnel takes calls of customers as an opportunity to know more about them and to serve their needs and wants better. No calls are made to people who would be busy working in their offices or possibly busy at home doing their chores. These calls are done for a valid reason, like an appointed time to resolve issues that customers called up Macy’s about anything they want to clarify. Customers can call about some inquiries, or their credit account, or to follow up an online purchase, etc.. Customer relations people at Macy’s will always consider the situation of customers, although it may be difficult to satisfy everybody. There are times when many emails pour into the Macy’s email box making it difficult to respond to most of them within acceptable prompt response time. Thus customers will complain. Little do they know that Macy’s Customer Service people have been calling them up one at a time. But there are simply too many who need the customer service. To get more immediate response, customers are encouraged to join the Facebook account of Macy’s Customer Calls where they can chat with a Customer Representative regarding their urgent needs. Inquiries, or simply wants. E-business can be done with Macy’s online product selection website at the E-business web pages. An online user can simply search the word E-business so that it will take him / her to http://www1.macys.com/search/results.ognc?Keyword=e-business&SearchTarget=* . Once in that first webpage for E-business, the customer may look for the product by selecting categories. At present, the categories are: Original Sort Order, Best Sellers, Priced high to low, and priced low to high. This can be followed up by online customer service via Contact Us or Tracking Orders or Returns. There are further instructions, terms and conditions, and forms to accomplish before the online payment. Digital Sales Process at Macy’s will fall under the E-business sales operations except that the E-business covers all products while the sales operations website at http://www1.macys.com/search/results.ognc?Keyword=sales%20operation&SearchTarget=* is more itemized not only by price range but also segmented by male or female needs, sizes, deals, and so on. The itemized website also allows for comparison of at least 2 selected items Discussion of Data Value Analytics The means of measuring value in short-term increments is the what many businesses call Net Promoter Scoring. Almost everyday, customer satisfaction is gauged through surveys accomplished by customers who are sent questions afer customer service has been rendered. There is no particular basis for choosing which customer in order to avoid bias. Feedback will then be utilized to train Sales Associates about how to handle various situations. This means Macy”s Inc. has been interested in every customer relationship experience, for the purpose of ongoing improvements in the way services are rendered and communications are done. As its customer relations personnel get trained and develop skills for the proper handling of customers, Net Promoter Scores improve and sales will also improve. Each customer is considered a potential source of revenue directly and indirectly. When they refer Macy’s to other people, those newly referred customers can become regular customers if properly treated. For the long term, the effects of having positive Net Promoter Scores will be increases in number of customers and increases in the sales level of Macy’s. Each day that there is a negative NPS, there might be a decrease in the number of loyal customers and a corresponding decrease in sales as a result of the ripple effect of people who pass on the news about poor customer services. It is therefore important to monitor each customer relation incident in order to keep the employees aware of the quality of services actually being assessed by customers. There are other feedback gathered for purposes of evaluation. Customers are free to contact Macy’s Inc. via phone at 800-289-6229 and pressing zero 3 times in order to talk to any customer representative. The time when people may contact the company may be Mondays through Saturdays between 9 am to 9 pm, Saturdays 9 am to 7 pm, and even Sundays at 11 am to 7 pm. People may also pour their complaints in a website where their complaints can be viewed anytime. There are many complaints in that website, including one that says Macy’s customer services are terrible. One said that after sending Macy’s an email concerning an incorrect shipment, nobody has been replying. And the customer’s commitment was that she will never shop online with Macy’s again. (Macy’s Inc. B 2012) The gathering of real time feedback allows the company to find solutions for better customer experience. And if the feedback is positive and referring to a specific employee, it will be an opportunity for the company to reward the employee who did well. As of this October 2012, the website even generates a score from 0 to 5 stars. Most customers prefer to talk to a live customer service personnel over the phone, so that when such a facilitation is absent, customers report why they got frustrated about Macy’s. For example, one reported that she did not want to disclose the Social Security # online when asked by an automated machine. CRM Design There is a complex organizational chart that facilitates the various effort leading to excellent customer relationships. By simply viewing the organizational chart of Macy’s Inc., it can be seen that many Executives have to do their part of the overall objective of providing the best customer satisfaction to derive customer loyalty from short term to long term. All of these are somehow connected to the objective of maximizing sales, profits, and customer satisfaction. Although Macy’s Inc. does not show a specific CRM design, its online explanations tell the readers that the center of its operations has been in providing people with memorable and positive customer experiences. In general, the CRM design should be logical and leads to a sustainable business enterprise. A theoretical model of such a design implied by the actual operations of Macy’s is shown as follows: Figure 1. Factors That Define The CRM Figure 2. Processes of CRM Leading to Objectives Implementation Although Figures 1 & 2 look oversimplified, the actual implementations are intricate because in Customer Service, even the online communications are recorded for quality control evaluations and corrections. There are millions of transactions in a day and millions of different customer relations opportunities which cannot be 100% monitored given the limited number of customer service personnel. Training is ongoing. Manpower changes do take place and a new set must be trained all over again starting from scratch. The complexities are staggering to the individual mind. Only a disciplined organization can possibly meet requirements each day. Even the specified requirements to satisfy people can change depending on the events of various times. But the system objectives will always remain the same for the purpose of establishing the loyalty of customers to Macy’s products and services. Works Cited Business Wire. Macy’s Shop-for-a-Cause CampaignRaises $ 4 Million. Viewed November 2, 2012 @ http://phx.corporate-ir.net/phoenix.zhtml?c=84477&p=irol-newsArticle&ID=1731909&highlight= Buttle, Francis. Customer Relationship Management. USA & UK: Butterworth-Heinemann / Routledge, May 23, 2012. Print Hoovers. Macy’s Inc. Information. Hoovers, A D & B Company, 2012. Viewed November 2, 2012 @ http://www.hoovers.com/company-information/cs/company-profile.Macys_Inc.954ec8ce037ed0d1.html Macy’s Inc. A. Macy’s Milestones. Viewed November 3, 2012 @ http://www1.macys.com/store/about/history/index.jsp Macy’s Inc.. Highlights of Progress in 2011. Macy’s Inc. Annual Report 2012. Viewed November 1, 2012 @ http://www.macysinc.com/Assets/docs/for-investors/annual-report/2012_fact_book.pdf Macy’s Inc. B. Macy’s General Customer Service. Viewed November 2, 2012 @ http://www.contacthelp.com/directory/Shopping/Clothing+and+Department+Stores/Macy's?ListingID=75 Macy’s Inc. D. Annual Report 2012 For Investors. Viewed November 4, 2012 @ http://www.macysinc.com/assets/docs/for-investors/annual-report/2012_proxy_statement.pdf Peppers, Don and Rogers, Martha. Managing Customer Relationships: A Strategic Framework. USA: John Wiley & Sons, December 10, 2010. Print Read More