Can You Make Money In CRM?


CRM isn't something that comes shrink-wrapped in a neat little package. Making a customer relationship management solution work for a client requires an understanding of the customer's business, creating a perception of a personal touch that extends to your client's customers. It's difficult, but, done right, there's money to be made.

Trans World Entertainment hopes so. The national music and video retailer is in the process of deploying a new $40 million CRM solution that makes use of customer preference data gathered from the company's 980-plus retail locations, as well as its Web site, fye.com.

Last March, Trans World began the arduous process of recasting its mall-based stores and its Web site under a single brand called FYE (For Your Entertainment). The newly branded identity called for new technology as well, including installation of in-store listening and viewing stations and kiosks.

"We see it as an investment in our future," explains Mark Hogan, Trans World's vice president of marketing. "What we're trying to do is invest in a customer experience that differentiates us from our competition."

And Trans World has some sizeable competitors, including Best Buy, Wal-Mart, Tower Records and Sam Goody.

But there's a problem. To date, companies are generally dissatisfied with their CRM implementations. According to Gartner, more than 75 percent of enterprises involved in CRM projects cannot successfully create a full and accurate view of the consumer with actionable, personalized advice for either the consumer or the customer-service representative.

DiamondCluster International, the Chicago-based solution provider handling Trans World's CRM project, says its CRM solution is different. Brent Lohrmann, partner in the retail and consumer products practice at DiamondCluster, says the project's success is based on both human and technical factors.

"This really involves our consultants' skills in understanding both the retail and technology environments that lead to the design of complete solutions and timely delivery of systems," Lohrmann says.

Lohrmann points to Amazon.com as an example of a successful CRM implementation VARs like DiamondCluster should model. He thinks Amazon.com's model of tailoring customers' preferences based on their previous experiences can translate well to Trans World which, in addition to an online presence, has stores located in shopping malls under the trade names of Record Town, Camelot Music, Disc Jockey and The Wall, as well as standalone stores that include Coconuts, Strawberries Music and Spec's Music.

How They Did It

The first step DiamondCluster took in deploying a CRM solution inside Trans World's retail locations was to let customers review the more than 50,000 titles Trans World sells in each location, and provide catalog kiosks with touch-screen Windows XP devices that let customers purchase any of the hundreds of thousands of products available across the retailer's chain.

Lohrmann says products for the Trans World project were chosen based on a combination of capability, functionality and price, but most were also proven products that have weathered the test of time (see "Nuts and Bolts").

"It's the integration of all the elements,the [special offers, the customers' ability to shop on the Web, the Backstage Pass program that gives special discounts to repeat customers, and hopefully, even concert tickets [that's key to the project's success," Trans World's Hogan says.

But a CRM implementation of this magnitude has its challenges. "From the technical perspective, it's integrating the points of sale, knowing the stores' inventory, integrating multiple content information, and knowing that the customer is the same person no matter where that person shops," Lohrmann says. "Before, they didn't know who their customers were."

The new Backstage Pass program asks customers to scan their membership cards in the store or type in their card numbers on their computers, which let Trans World recognize them regardless of location. The customers then receive personalized product offerings and alerts to new artists whom they may be interested in.

Trans World's Hogan is optimistic about the project, but says it's too early to gauge its success or failure. The retailer is still piloting the listening and viewing stations, catalog kiosks and Backstage Pass customer loyalty program. First initiatives can been seen in retail locations in New York; Detroit; Hartford, Conn.; Albany, N.Y. and St. Petersburg, Fla., but the program won't be fully rolled out nationwide until the middle of this year.

Despite Trans World's initial success with its listening and viewing stations, Hogan notes that such a CRM project isn't a fast-and-easy solution for the challenge of obtaining and retaining retail customers. "Of course, going into it, not everybody is successful with CRM," Hogan says, "but this is a critical thing for our business, and we made a long-term commitment to it."