CRM Marketing of Amazon.com - Case Study Example

CRM Marketing I. Executive summary Amazon.com is a global retailer that has managed to acquire a substantial market share in online retailing, compared to its competitors. The company has been successful in establishing customer relationship that has created excellent customer experience, majorly through its highly customized E-mail marketing1. However, the customers of the company feel distanced from the company, due to its little direct physical interaction with the customers. The direct interaction of the customers with the product and the seller is the essence of shopping2. Therefore, there is a need for Amazon.com to improve on is direct personal interaction with customers, which will in turn boost the customer loyalty, repeat purchase and referrals, thus expending on the company’s market share and financial performance. This can be achieved through the application of several strategies that would enhance the direct contact and interaction of Amazon.com with its customers. These strategies include the establishment of physical retail stores, focusing on physical promotional and advertising strategies such as road shows and field days, customizing its products and services to suit the social-cultural orientation of its diverse global customer base, as well as differentiating the product advertisement and promotional campaigns to suit different demographic structures such as age and gender. II. Background and history with the Amazon.com Amazon.com is a global retail giant, which defines itself as a customer centric organization that starts with the customers, and then work backwards to define its product and service provision strategies3.There is no doubt that the company has succeeded in this definition, considering that it has managed to emerge as the global number one retailer, with over 30 million customers worldwide, and with a highly rated customer satisfaction response4. Nevertheless, there are still several areas of customer relationship management improvement that Amazon.com needs to address, in order to fully accomplish high level of customer experience. I started shopping at Amazon.com in 2009, thus have a 5-year shopping history with the company. The most notable experience that is associated with the 5-year shopping history with Amazon.com is that the company highly values its customers, and tries all ways possible to enhance the customer experience. This is especially in the area of E-mail marketing and customer communication, where Amazon.com has adapted a high degree of customized communication with the customers, through sending customized E-mails. Amazon.com has also enhanced the customer experience through ensuring that the customer deliveries are timely, while also ensuring that rarely do customers find the products they seek to purchase having run out5. Nevertheless, there is a high focus on online customers by Amazon.com, while disregarding the local customer contact needs. III. Current Situation According to the IDIC Model of Customer Relationship Management, companies should take four actions, in order to foster closer one-to-one relationship with the customers (Buttle, 19). Thus, the following are areas of CRM improvement for Amazon.com, as provided under the IDIC Model. Identifying: Amazon.com has broadly defined its customers as retailers, with little efforts to specifically define the customers. Thus, the company has identified customers online, but done little to identify the local customers. Differentiating: There is little differentiation in the customers of Amazon.com, to determine which customers deliver more value to the company than others. Interacting: There is little direct and personal interaction between the company and its customers. Customization: Amazon.com has a high level of customization in customer communication through E-mail marketing, but little customization in product categories. Conclusion Amazon.com needs to improve in several CRM areas, by identifying local customers, differentiating the customers that deliver high value from the rest, establish direct avenues of personal interaction with the customers, customize product categories, and finally establish new physical avenues for customer communication, other than E-mail marketing. IV. Recommended CRM Strategies a. Problem Area/Area of Improvement Identifying the local customers b. Recommended CRM Strategy Amzon.com requires focusing more locally. This is because, while the company has been able to target and define its online communication strategies with the online customers, there is still a category of local customers within the USA, which feels distanced from Amazon.com in one-to-one personal interaction, despite the company being situated within the country. Customer satisfaction is enhanced through direct personal contact and interaction with the product and the seller, which is the essence of shopping6. c. Benefits if Implemented Therefore, by identifying the local customers and identifying their potential needs, Amazon.com can be able to establish physical retail in-stores, which can serve the interest of the local customers. Amazon.com is currently experimenting on physical stores to reach the local customers, through establishing various warehouses in different parts of the USA, where customers can access its products directly7. However, this move needs to be energized and speeded up, to effectively reach all the local customers. a. Problem Area/Area of Improvement Differentiating b. Recommended CRM Strategy Amazon.com has a wide customer base, owing to the diversification of the products offered by the retail company, ranging from books, to music, videos, software, furniture, clothing, toys and recently food items8. While each product in the different categories requires having a target customer market, Amazon.com has offered the products under the same retail banner, with less effort to target its advertising and promotion for each product category to the relevant target group9. Thus, the company needs to differentiate its advertising and promotional messages to target specific market niche, for each range of product category offered. c. Benefits if Implemented Differentiating the customers through specific advertisement target will improve the customer experience, since each customer group for the different range of products offered will feel part of the valued customer category10. a. Problem Area/Area of Improvement Interacting b. Recommended CRM Strategy Amazon.com has little direct and personal interaction, considering that its main relationship is online interaction with the customers (Webley, n.p.). Therefore, Amazon.com should establish both physical stores and physical customer service centers, to enable the customers interact directly with the customers, especially locally, but also abroad in the long run. c. Benefits if Implemented Direct and personal interaction with the customers makes the customers feel valued and appreciated by the business (Gordon, 72). a. Problem Area/Area of Improvement New avenues for customizing customer communication, other than E-mail marketing b. Recommended CRM Strategy E-mail marketing has proven to be one of the most effective advertising strategies for Amazon.com11. Nevertheless, this strategy needs to be reinforced with other advertising and marketing strategies such as point of sale interaction and direct customer reaching promotional strategies such as road shows and field days, to help address the customer needs and concerns directly. c. Benefits if Implemented Marketing strategies that target direct interaction with the customer enhances their experience with the company, while also addressing the needs and concerns of the potential customers with limited online shopping access12. a. Problem Area/Area of Improvement Customize product categories b. Recommended CRM Strategy Amazon.com has customers globally, and the cultural, economic and social needs of such customers vary greatly13. However, most of the products offered by Amazon.com are suitable to the western social-cultural orientation, while negating the diverse cultures from different regions globally, which might have a different orientation in social-cultural shopping practices14. Therefore, different products offered by the retail company should be customized to the specific social-cultural and economic orientation of the diversified range of customers globally. c. Benefits if Implemented Customizing the products and services offered by Amazon.com to the specific economic and social-cultural orientations of the diverse global customer base, will enhance the customer experience for the customers oriented differently from the western culture15. V. Required Resources & Implementation Huge financial resources will be required to implement the strategies, considering that establishing physical retail stores will require enormous resources, for Amazon.com to be able to reach its widely spread customer base directly and physically16. Secondly, vast human resources will be required for implementing the strategies, considering that to achieve direct personal customer interaction with the customers; the retail store will require employing many staffs. Proposed plan of action The implementation of the strategies should be gradual, starting with the establishment of few physical stores and physical customer service centers, which can then be spread to cover the entire customer base locally and internationally, based on the number of customers in a give region. However, the physical interaction with customers through direct and personal promotional interactions such as field days and road shows can be achieved at relatively low cost compared to the physical establishments. Therefore, Amazon.com should first specialize on this strategy to directly reach and interact with customer who feels distanced from the company due to its high specialization in internet business. VI. Key Performance Indicators The key performance indicators for the strategies should be customer feedback, acquired market share and change in financial performance. These are suitable performance indicators, because they are directly related to the change in the customer interaction strategy, such that the improved direct customer interaction should increase the customer loyalty, repeat purchase and referrals17. The overall effect is that such changes should impact on the market share and financial performance of the company18. Further, these performance indicators are suitable, considering that they are quantitatively measurable. VII. Bibliography Buttle, Francis. Customer relationship management: concepts and technologies. London: Routeledge, 2007. 19-25. Print. Chaffey, Dave. E-marketing excellence: Planning and optimizing your digital marketing. London: Routeledge, 2012. Print. Gordon, Ian. Managing the New Customer Relationship: Strategies to Engage the Social Customer and Build Lasting Value. Canada: John Wiley & Sons, 2013. Print. Savitz, Eric. “Amazons Hidden Weak Spot: Lack Of Local Leverage.” The Forbes Magazine, October 29, 2012. Retrieved April 19, 2014, from http://www.forbes.com/sites/ciocentral/2012/10/29/amazons-hidden-weak-spot-lack-of-local-leverage/ Stone, Brad. The Everything Store: Jeff Bezos and the Age of Amazon. New York: Little Brown and Co, 2013. Print. Webley Kayla. “A brief history of online shopping.” Time, July 16, 2010. 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