What is "Collaborative CRM"​ and why do most fmcg retailers find it difficult?

February 21, 2019

Imagine being the owner of a fast moving consumer brand, competing with many others, with an advertising/media budget running into the £10s of millions. Spending big money with Facebook, Google and other media without being really sure whether you are generating a positive return. Even if it seems that you are generating profitable growth, its hard to tell whether this is from acquiring new consumers to your category, switching them from a competitor’s brands or increasing the usage and repeat rates of existing ones.

Now imagine being a retailer selling fast moving consumer brands and having a customer loyalty programme with rich transactional data that enables you to predict which of those fast moving products a customer is likely to want to buy, when and through what channel and to be able to measure the repertoire of brands they buy, how often and when they switch brands.

Imagine further that you have created a variety of ways to target those customers with personalised offers or content and you can deliver it to them via the website, app, email, printing on a till receipt or the post at ultra low cost via the latest in CRM software and marketing automation.

You might expect that the retailers would say to the brand owners something along the lines of : “hey, why not use my loyalty platform instead of Facebook, Google and other media to target offers and content to your consumers. I can measure the results precisely and can tell you how effective the spend has been. I can tell you who has bought your product for the first time, who has switched from a competitor, which brand they switched from and who has increased their usage or purchase frequency”

And you might expect that the brand owners would test this out and, assuming they achieved better results and the outcomes were indeed measurable, they would switch a large portion of the £10’s of millions they are spending elsewhere and invest it with the retailer.

Well this does in fact happen. But in very few places. In the UK, Amazon, Tesco and Sainsbury would be the stand out examples. They are benefiting from additional supplier spend in the £100’s of millions.

Soundings from suppliers and industry insiders suggests that Morrisons, Co-op, Waitrose, Iceland, Boots, Superdrug, Pets at Home are all sub optimised in some way despite having the data and platform potential.

Outside of the UK Kroger, possibly Woolworths & Coles in Australia and one or two others have properly optimised this at scale (if you know differently please let me know !). DIY retailers and electronics retailers like Dixons Carphone also have this same opportunity albeit with less frequent purchase frequency.

Why is it that the vast majority of fast moving goods retailers have this capability in place but don’t use it with their suppliers ?

Having helped pioneer "Collaborative CRM" with Tesco, Kroger, indirectly with Sainsbury and having worked closely with leading supermarket, beauty and pet retailers around the world in Australia, Europe, Asia, Africa and the Middle East, my conclusions would be :

a)      It requires a CEO, CMO and Trading Director who “get it”

b)     It requires an internal champion who “gets it”

c)      It requires the retailer’s CRM team to have robust processes and technology that optimise offer allocation for customers (and not business users or suppliers) and to be able to cope with the additional complexity this brings.  

d)     It requires a dedicated team who understand what the supplier’s marketing and brand teams are trying to achieve, understand what the retailer’s CRM team are trying to achieve and can help both to achieve what they want better than the myriad of alternatives that each has,

e)     This dedicated team typically fails if it is set up within a retailer’s trading team or primarily interfaces with the brand’s sales/trading team

If any of these 5 elements are missing then the outcome is almost certainly sub optimised. “All organisations are perfectly designed to achieve the results they do” and in my experience most retailers are unfortunately designed for mediocre Collaborative CRM results. If retailers want to achieve a higher share of the £ trillions that bands spend on advertising, they have to first look at how they are organised to achieve it.

go Back to blogs
Let’s discuss how we could work together
contact us