The Hindu Business Line : Making CRM work

Customer relationship management. It's a tool that's being employed by almost every FMCG company. But is it structured enough? And, more importantly, is it delivering the right results? Catalyst finds out.

DR Pepper, the US-based soft drink, was looking for a rewards programme to build and sustain market share and product placement. While its bottling was being executed by some 300 independent bottlers, the incentive programme required distribution and implementation at a regional level that was simple, easily tracked and effective. The solution was found in a dealer loyalty programme. Dr Pepper produced and inventoried 20,000 vendors. When local field representatives needed a quick incentive, they had a reward handy. All they did was fill an online order form for a vendor card and allocate promotion award funds. The electronic administration made accounting simple, prevented fraud, and produced higher sales and strengthened the brand.

Or take Coors, the American beer company, which wanted to build sales through a programme targeting distributors that was consistent yet adaptable. Previous incentive programmes involving merchandise, travel and sweepstakes had been costly and time-consuming. Coors developed a programme which gave dealers points on the basis of stocking and participation in company promotions. This was activated with the help of a Coors Bullet Bucks solution card. One card was given to each dealer and the rule structure adjusted for every area. Electronic activation and deactivation cut paperwork and red tape drastically - it was 20 per cent less costly to run than Coors' previous incentive programmes, was faster, and produced spectacular results.

Cut to India. Economic slowdown, heightened competition, fragmented retail structure, extreme consumer price sensitivity, low levels of product differentiation, and more.

Enter Customer Relationship Management (CRM). While the practice of adhering to the 4Ps of marketing remains sacrosanct within the fast moving consumer goods (FMCG) industry, another marketing tool that's making its presence felt loud and clear is CRM. In this industry, CRM's definition translates into including managing relationships with channel partners and helping them reach out to the end consumer.

Observes Namrata Rana, Managing Director of the Delhi-based CRM consultancy firm, FutureScape Netcom, "It's common knowledge that within the FMCG sector, CRM also needs to be practised at the retailers' level. The number of consumers is too large, products are purchased directly from retailers, and a particular candy or cola brand is just one among the 250-odd products that the retailer stocks. The value of business is more easily captured through the distribution channel — comprising top-end dealers and distributors. This is where CRM — or partnership related management -- becomes critical.''

While the FMCG sector has traditionally recognised the importance of dealer relationship programmes, end-consumer relationship programmes have been by and large disjointed. The reasons aren't too hard to find.

Explains Carlo M. Donati, Chairman & Managing Director of foods major Nestle India, whose consumer-end CRM-driven initiatives include setting up `affinity groups' like the Maggi Club, the Nestle Kitchen in partnership with rediff.com, and Cook-n-Serve interactive cooking demos, "While customer relationship has always been an integral part of the Nestle philosophy, CRM as a concept is beginning to be spoken about much more within the industry. However, it is important to realise that standalone CRM initiatives cannot deliver in the short term and could be expensive. Relationship building is a slow process, specially in a country like India where markets and consumers are much more heterogeneous.''

Or take Dabur India, which is now toying with the idea of setting up call centres with toll-free numbers or interactive Web sites or both. "The problem of the consumers being too many and too scattered remains. But we do recognise that CRM is an emerging industry trend. And though we have not yet decided on the medium to deploy consumer-end CRM, the effort would be to provide a platform to the consumer to get closer to the company and encouraging her to offer solutions, feedback and suggestions,'' observes Sunil Duggal, Chief Executive Officer, Dabur India.

Echoing the problem with reaching the end-consumer directly, a Pepsi India official points out to the recent controversy that broke over Pepsi and Coca-Cola being charged in court for `damaging the environment' by painting advertisements of their products on rocks in Manali. "We were hauled up for this, which shows the extent of our brand's penetration. With locations being so remote, reaching the consumer directly is obviously tough. But we do inculcate regular global practices like setting up national-level call centres to address consumer complaints,'' says the Pepsi official.

Coca-Cola India says it trains consumer response coordinators (CRCs), who in turn train their sales teams to understand and implement its global systems. According to Sunil Gupta, Vice-President, Public Affairs, Coca-Cola India, the CRM system generates daily, weekly, monthly and annual reports that keep the management aware of routine and evolving consumer concerns, with management reviews undertaken routinely.

Chennai-based FMCG company CavinKare Pvt Ltd, meets up with identified members of consumer panels once a quarter for every brand in its portfolio to take first level feedback on user experience or to test a hypothesis based on feedback from the sales force.

These are followed by focus group discussions based on the need for validating a hypothesis or for supplementing the findings of a syndicated research, points out a CavinKare spokesperson.

While consumer-level CRM efforts are beginning to cover ground, the big challenge is to do with channel-level partnership, which have moved beyond the `free gold coin' days. As Rana points out, unstructured trade-level CRM can cost the company heavily. On the other hand, if practised optimally, it guarantees returns on investment.

So what does `optimal utilisation' of the trade translate into? "Tapping the retailer effectively. Ask any FMCG company about their consumers and they will tell you about broad research findings. Ask them about the individual consumer profiles and they draw a blank — that's understandable. One way to crack that is to keep talking to the retailer. Ultimately, it is the retailer who will provide information which isn't institutionalised by any research agency,'' says Rana.

As the Pepsi official elaborates, "Unlike a consumer durable, millions of transactions happen between the customer and consumer on a daily basis in our kind of industry. Only regular servicing of the retailer works.'' Pepsi India is putting together an online monitoring system for retailer-level demand forecasting, especially for retailers who are key Pepsi accounts — in other words, retailers who are bulk customers on a regular basis.

CavinKare has reaped benefits from extensive `specific interface programmes', one example being organising regular `hairdresser meets'. "Under the programme, the marketing team meets up with hairdressers and explains to them product features of Indica — our hair colourant. The team also takes aggregate-level feedback from hairdressers on consumer experience, which is pooled for strengthening the product offering and communication,'' says a Cavinkare spokesperson.

So has the FMCG industry cracked the Real Consumer in totality? Not yet. As Donati concludes, "Initiatives such as these have to be sustained and be part of a larger approach to the consumer.''

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