This thesis analyses the topic customer card in the context of CRM but with specific reference to the German Textile Industry.
According to history Henry Ford mentioned with the introduction of the “Modell T” in 1908 that every customer could choose the colour of the car by himself as long as the chosen colour was black. He did that because black was easy to work with. Because of the non-existing competition during this time, companies did not have to operate towards consumer needs and were able to focus on the goods they produced.
Mass marketing was developed to reach out for as many customers as possible to sell the maximum amount of goods. In the late 1960s the quality of products became similar which changed the competitive situation. Companies were forced to differentiate from each other by creating customer benefits. Because of the rising variety, consumers started asking for products fitting their needs. New technology led to machines that were able to produce different types of products and mass customizing was born. To be able to individualize a product, a lot of information concerning the customer, needs to be collected. This process is called customer integration. Mass customizing has a one way communication from consumer to company. To create a dialog relationship, marketing was developed. The aim was to build a long-term relationship between company and customer, so that both sides generate a benefit. A rising profitability and a longer business relation were responsible for higher profits. Research led to the result that it is about seven times cheaper to keep a customer than generating new ones. According to further results, an increase of 5% in customer relationship can enable a profit increase between 20% and 120% by cross- and up-selling actions. Customer Relationship Management (CRM) describes this relationship process between a company and its customers. During the time of the relationship, customers are supposed to be bound to the company for as long as possible, so that they will not migrate to a competitor.
Different CRM-tools have been developed to achieve that goal. A common one is the customer card program. In Germany there are approximately up to 200 million customer cards in use at the moment.
Table of Contents
1. Introduction
1.1. Problem definition
1.2. Aim and research objectives
1.3. Structure of thesis
2. Customer Relationship Management
2.1. Theoretical background
2.1.1. Definition of CRM
2.1.2. Types of bonds
2.1.3. Operative and analytic CRM
2.1.4. Customer satisfaction, trust, and commitment
2.1.5. Customer loyalty
2.2. Customer Life Cycle
2.3. Opportunities and risks
2.4. Instruments
3. Customer card
3.1. Theoretical background
3.2. History and development
3.3. Types and categorization
3.3.1. Open and closed systems
3.3.2. Stand-alone versus multi-partner-card
3.4. Functions
3.5. Objectives
4. CRM in the German Textile Industry
4.1. Market structure
4.2. Breuninger, P&C, H&M
4.2.1. Breuninger
4.2.2. Breuninger Card
4.2.3. Peek & Cloppenburg
4.2.4. Peek & Cloppenburg Card
4.2.5. Hennes & Mauritz
4.2.6. H&M Club
4.2.7. Comparison of programs
4.3. Additional loyalty tools in the German textile industry
4.4. Controlling
4.4.1. Costs using a customer card program
4.4.2. Returns using a customer card program
4.5. Regulatory framework
5. Opportunities and risks of customer cards
5.1. Opportunities
5.1.1. Card design, incentive structure, and service
5.1.2. Customer view of advantages and use of customer cards
5.1.3. Data evaluation
5.1.4. Securing staff support
5.1.5. Integration into corporate strategy
5.2. Risks
6. Diversification
6.1. Economic diversification
6.2. Social diversification
6.3. Technical diversification
7. Conclusion
Research Objectives and Key Themes
This thesis investigates whether customer cards remain an effective Customer Relationship Management (CRM) tool within the German textile industry, analyzing their role in fostering customer satisfaction, trust, and commitment amidst market saturation and technological change.
- Analysis of CRM theories and their application in the German textile retail sector.
- Evaluation of customer card programs from major players: Breuninger, Peek & Cloppenburg, and H&M.
- Examination of the economic and psychological opportunities and risks associated with card programs.
- Investigation of future trends, including digital and mobile-integrated CRM solutions.
- Assessment of the importance of the "Silver Generation" and younger target groups for future strategy.
Excerpt from the Book
3.3.1. Open and closed systems
Customer card programs can be open or closed systems. Open systems are available for everyone; closed systems can only be entered by certain customers. Because of the easy access the open systems are usually the ones with the most members, such as Payback. According to a study by GfK in 2008 more than 60% of German households join the Payback program. A risk for open systems is that they have a large amount of inactive users which generate a high scatter loss. To prevent this risk, other companies use closed systems. Common tools for a closed system are an annual fee or a certain amount of orders or sales which need to be reached before a customer can enter the program. The annual fee is the strongest filter because only customers who already have a loyalty towards a company will be willing to pay for their membership. This fee can be used to cover the upcoming costs of this program. At the same time customers’ expectations towards the program and its content will rise. Closed systems have a two way character. On one side access restriction can keep away valuable customers and on the other hand they can create prestige image because not everyone is able to enter.
Another way to limited access can be achieved by quality conditions, for example by the annual turnover of a customer. Using this factor, programs can create different levels which can be reached. By this method the selected target group can be defined clearly and the efficiency of services can be increased. The higher a customer gets in the level system, the higher his affinity towards the program will be.
Chapter Summaries
1. Introduction: Outlines the problem definition of market saturation in the German textile industry and sets the research objectives regarding CRM effectiveness.
2. Customer Relationship Management: Provides the theoretical foundation, discussing CRM concepts, bond types, the customer life cycle, and various marketing instruments.
3. Customer card: Describes the development and technical nature of customer cards, including their categorization into open vs. closed and stand-alone vs. multi-partner systems.
4. CRM in the German Textile Industry: Analyzes the market structure and compares specific loyalty programs from Breuninger, P&C, and H&M, alongside regulatory and controlling aspects.
5. Opportunities and risks of customer cards: Explores the advantages of data collection and segmentation against the risks of high costs, legal requirements, and market saturation.
6. Diversification: Discusses future developments, specifically economic, social, and technical diversification, with a focus on mobile apps and the "Silver Generation".
7. Conclusion: Summarizes the findings and provides outlooks on how digital transformation and demographic changes will shape future CRM strategies.
Keywords
Customer Relationship Management, CRM, Customer Card, German Textile Industry, Customer Loyalty, Customer Life Cycle, Data Mining, Market Saturation, Omni channel, Silver Generation, Consumer Behavior, Incentive Structure, Retail Marketing, Digitalization, Customer Retention.
Frequently Asked Questions
What is the core focus of this thesis?
The thesis examines the effectiveness of customer card programs as a CRM tool specifically within the German textile retail industry, addressing challenges like market saturation and changing consumer behavior.
What are the central thematic fields?
The core themes include CRM theory, the evolution of loyalty programs, comparative analysis of retail card systems, and the strategic opportunities offered by digital transformation.
What is the primary research goal?
The aim is to determine whether traditional customer cards are still useful and to identify the necessary strategic adaptations, such as digital integration, to ensure their future success.
Which scientific methodology is applied?
The work utilizes a combination of literature review, market analysis, and case study evaluations of three prominent retailers: Breuninger, Peek & Cloppenburg, and H&M.
What topics are covered in the main section?
The main sections cover CRM definitions, the historical and practical development of customer cards, specific industry practices in Germany, and an in-depth analysis of opportunities and risks.
Which keywords best characterize this work?
Key terms include Customer Relationship Management, Customer Card, Loyalty, Data Mining, Omni channel, and Digitalization.
How does the "Silver Generation" impact customer card strategy?
According to the thesis, the Silver Generation is a growing and wealthy demographic that requires tailored benefits, such as cultural events or specialized service functions, rather than traditional mass-market discounts.
Why is digital diversification considered a future trend for customer cards?
Digitalization allows for real-time interaction, personalized offers based on inventory and behavior, and seamless integration into mobile apps, significantly reducing the costs of traditional mail-based communication.
What makes the H&M Club different from the other analyzed programs?
Unlike the traditional plastic cards used by Breuninger or P&C, H&M utilizes a purely digital card integrated into a smartphone app, which aligns with the technical preferences of its younger target audience.
- Citation du texte
- Claus Hombrecher (Auteur), 2016, Customer Card as a Tool for CRM in the German Textile Industry, Munich, GRIN Verlag, https://www.grin.com/document/458055
