Magazine Article | December 16, 2008

Use CRM To Increase Sales

Source: Innovative Retail Technologies

Targeted marketing campaigns result in e-commerce sales spikes of up to 500% for $450 million Tommy Bahama.

Integrated Solutions For Retailers, January 2009

Doug Wood, president and COO at Tommy BahamaDoug Wood didn't know what he was missing. As president and COO at Tommy Bahama, Wood oversaw the implementation of an enterprise retail software system in 2002. The software package his company purchased included modules for POS, CRM, merchandising, planning, replenishment, and sales analytics. But the retailer did not 'flip the switch' on the CRM application. It wasn't until 2008 that Wood started significantly utilizing his CRM module, and in doing so, he quickly realized the countless opportunities to increase sales he had missed while the valuable data in the module sat idle.

Don't Overlook The Value Of CRM
Tommy Bahama has 82 retail locations that offer upscale men's and women's apparel, accessories, and gifts, as well as home furnishings. When the retailer opened its first retail stores in 1996, it operated each one with the most basic of POS systems — cash registers purchased from an office supplies store. At the time, the lack of an integrated POS solution was not a major concern for Wood; Tommy Bahama had simplistic inventory problems that were easy to manage. If one store was overstocked, Wood simply sent the surplus back to the warehouse. "It wasn't until we grew to 20-plus locations that we realized we needed a robust retail system to centralize the POS functionalities [i.e. credit/cash transaction facilitation and inventory tracking] of our existing and future stores, as well as our e-commerce platform," says Wood. "The liability we had on our inventory was the biggest obstacle we faced at the time. Inventory equals money; that's where the investment is. I had to make sure we put the optimal amount of inventory in each store to ensure sales." To accomplish that, the retailer needed a retail system that would plan and forecast correct levels of inventory. Wood admits at the time he didn't even consider the CRM module as a way to help solve the company's inventory problem. In 2002, the retailer implemented the STS retail suite (STS was purchased by NSB, which ultimately was purchased by Epicor in 2007) to alleviate its inventory problems. The suite included the previously mentioned modules. The retailer purchased its servers from Dell. The original installation took more than a year due to the six modules that were installed.

Create Your Marketing Message With CRM
Over the years, the retailer went through several upgrades of its retail software modules, but performed little maintenance on the CRM module. Although the CRM module was collecting valuable customer and sales data (e.g. email and mailing addresses and products purchased) at the POS, the retailer's marketing team did not use the data. In 2007, the retailer hired a new marketing manager and was in the throes of launching its e-commerce website. The new marketing manager, knowing how crucial CRM data is to launching a successful e-commerce business, suggested the retailer conduct an RFP for a new CRM module. Wood agreed, saying he felt the existing CRM module's features might have been outdated, and more sophisticated systems may have forged their way into the market. "In today's retail environment, it's critical to speak directly to your retail guests, and the only way to do that is to implement a CRM system that helps craft your marketing message," says Wood. "The success of our e-commerce business relies heavily on the use of CRM data." 

In February 2008, the retailer conducted a 30-day RFP for a new CRM system and  considered five CRM vendors, including Epicor's newest offering. In the end, the company discovered the easiest way to seamlessly integrate CRM with its POS module was to remain with Epicor. "The RFP made us realize we already had so much more capability than we thought," says Wood.

Once Tommy Bahama chose Epicor's CRM 6.0 module, the vendor developed a team that included a project manager, a CRM specialist, a technical specialist (who performed the installation), and a hardware specialist (who served as a consultant). This team worked with the retailer to ensure it implemented a CRM system based on not only the retailer's current needs, but also potential future needs (e.g. lead generation, purchasing behavior, etc.). These needs were outlined during product review meetings held at the retailer's headquarters. Four Epicor representatives were on-site for three to four days per week for two weeks until the review meetings were complete. To accommodate the new CRM data, the retailer also needed to purchase a newer, more powerful server than the one it had been using. In total, Epicor's team was on-site for three to four weeks during the four-month installation period. The new solution went live in June 2008. 

Participate In Ongoing Training To Master Your Product
"Epicor's technology team remotely accessed our system through a secure VPN [virtual private network] connection to install the CRM application," says Wood. "Even training could have been conducted via a webinar, but we elected to have their team conduct on-site training." The vendor conducts 'train the trainer' training whereby it teaches head office employees how to use the system. Then the head office employees group together stores in certain areas and train personnel there before the system goes live. Training is conducted on a per-module basis. Each training session lasts two to three days and is an ongoing process. When the retailer hires new employees or installs upgrades, Epicor returns to headquarters to conduct training. "We actively participate in the ongoing training they provide," says Wood. "The best data is worthless unless you have people who've been properly trained on what to do with it."

Influence Multichannel Sales With E-Marketing 
Today, Tommy Bahama supplements its brick and mortar sales with a successful e-commerce business thanks to the vendor's CRM 6.0 module. The e-commerce site has been active for just over one year, and the retailer has developed successful e-marketing and loyalty programs to boost sales. Regarding the e-marketing campaigns, the retailer has increased its customer database to include 250,000 email addresses and 850,000 mailing addresses. It sends informational email blasts (e.g. when a new line is available) once a week and twice a week in November and December. When the retailer sends email blasts to the names in the CRM database, its e-commerce sales increase up to five  times the level of a normal day's sales. For example, if Tommy Bahama were to generate $20,000 in e-commerce sales on a given day, an e-commerce email blast can skyrocket same-day sales to $100,000.

  On The Web: Casual Male Retail Group improves its direct marketing with CRM at

The CRM module has influenced sales at the retailer's brick and mortar locations as well. The data garnered from the CRM system allows Wood to accurately determine who his customers are, what their spending habits are, and where they're located geographically. This information allows the retailer to identify to whom to send mailers, and of those, whom those mailers reached. Furthermore, it allows the retailer to do analysis on incremental sales by region. The CRM module allows Wood to understand how the retailer is spending and utilizing marketing dollars.

Also, Tommy Bahama expects to reap benefits from its most recent loyalty program offer. In November 2008, the company created and mailed its first-ever catalog along with a $50 gift card to 225,000 of its loyal customers listed in the CRM database. The names were chosen based on customer behavior, such as purchase history during that time of year. The retailer projects a 30% to 60% incremental increase in in-store sales from the $50 gift card with this loyalty program offer. "Until we used the CRM system and the data it generates, we never considered ourselves a true retailer," says Wood. "We were more of a shopkeeper — we opened and operated nice stores and hoped people would enjoy our products. CRM data has enabled us to engage our customers in our stores, in their mailboxes, and on their computers."

The CRM module will be upgraded to version 6.2. Next on the list for upgrade is the merchandising system (see sidebar on page 16), which will allow merchants to accurately plan inventory levels. The merchandising module upgrade will be complete by September 2009. After that, the retailer plans to implement the BI (business intelligence) module. 
If you haven't surveyed your CRM system in a while, it may be time to revisit it. When used properly — or used at all — CRM is a valuable revenue-generating tool. More importantly, a good CRM tool can help your store avoid making costly mistakes, such as spending precious marketing dollars on the wrong audience. When reviewing your current CRM or conducting an RFP for a new one, look for features like data tracking and integration, customer support and training services, sales management tools, marketing automation, and analytics. Your store could be on its way to an exponential increase in sales.