Do Retailers Really Need A CRM?

By David Trice, Co-Founder and CEO
of Engage.CX

"Don't I need a CRM before I can do that?"

This is a question asked daily by retailers around the world. Creating strong relationships with customers is essential in the retailing industry, so it's important to consider anything that can help drive business in order to gain even more customers. But why are they asking this question now? The answer is simple: Retailers have never purchased a customer relationship management (CRM) tool. There was never a need for them to invest in this type of solution. Their point-of-sale (POS) system was the only system of record they needed.

Thanks to ever-evolving technology, however, retailers now have not only a POS system but also a marketing database, a social database, an ecommerce database and a returns database. All of this change in the industry spurs retailers into thinking they also need a CRM to consolidate or streamline customer information.

Use of CRMs is on the rise - there's no downplaying that fact. For instance, Gartner forecasts that CRM solutions will grow to be a $36 billion dollar industry by 2017, but should retailers put their dollars in this market? CRM systems of the past, and most of the current systems today, simply measure the conversion process, analyzing one sales stage to the next. These tools can help businesses build strong relationships with their customers in order to increase customer communication and satisfaction, as well as to ultimately discover new customer opportunities. CRM solutions can also enable small- to mid-sized businesses to migrate from manual methods, like spreadsheets, to a robust, online database. When used effectively, a CRM can be one of the most valuable assets a business can invest in. The question becomes: Do retailers really need to implement a CRM into their already expansive collection of databases?

The way traditional CRMs work is that the company's sales team enters customer data and information as they move the customer through the funnel. But is this information kept up-to-date? Most likely not.

Sales executives are too busy trying to land business to keep up with data entry, but companies are still depending on these employees to drive the sales process as well as update information within the sales funnel. The problem here is that the retail industry doesn't operate this way. When it comes to retail, the customer drives the process. There isn't a funnel in the traditional sense - customers engage on their own terms and those terms provide the context that enables businesses to respond in real-time. Retailers may not need a sales funnel, but they do need to consolidate customer information and have it at the ready for the next time the customer engages.

Unfortunately, a traditional CRM just causes more hassle for retailers, who have to implement and synchronize a database that was never created to drive better customer experience anyway. So what does this mean for retailers? Do they actually need to implement a CRM in order to maintain and manage their customer relationships? No, not in the traditional sense anyway.

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Implementing a database that is static and unresponsive to the real-time customer experience won't work with today's tech-savvy retailers. Retailers do, however, need an active process that allows them to cater to customers according to those customers' needs and preferences, right at the time of engagement and not a minute after. It's at that moment of engagement - whether digital or physical - that the interaction matters most and an empowered brand advocate, salesperson or employee can make all the difference.

By delivering a timely, positive experience to their customers, retailers can turn noncommittal window shoppers into a profitable customer relationship that extends far beyond store walls or Web pages.

David Trice is the co-founder and CEO of Engage.CX.