When a product is purchased, who would you say owns the rights to the customer – the retailer or the manufacturer? As part of the checkout process, the customer is asked if they would like to receive communications from the retailer in the future or to opt out. So in this instance the retailer has custody. If the customer wants to receive information about product updates, they need to go to the manufacturer’s Web site and register their product. So in this instance the manufacturer has custody. If they do both, the customer is signed up to receive offers from both the retailer and the manufacturer, so both have some degree of custody.
Let’s think about this for a minute. The manufacturer worked hard to get listed with the retailer and now a sale has happened. The retailer has worked hard to attract customers by providing choice and now a sale has happened. Both retailer and manufacturer want repeat business. This is both an online and a bricks ‘n mortar dilemma.
When the manufacturer has permission to contact the customer, the manufacturer will not necessarily (OK, probably won’t) drive traffic back to the retailer. If they sell direct, the manufacturer will be seeking to bring the retailer back to their own online store or catalog to purchase more products, accessories or upgrades. The manufacturer has to do this because the retailer almost certainly does not carry complete breadth and depth of the manufacturer’s product line and accessories, all of which carry full margin for the manufacturer.
When the retailer has permission to contact the customer, the retailer will not necessarily (OK, probably won’t) recommend just the manufacturer’s wares to the customer the next time they communicate with them. They will offer competitive products, too. The retailer will be focused on turning the customer into a preferred customer by increasing their frequency of visit and value of purchase. The retailer has to do this because they have to offer lots of different products (choice) and after-sale services to the customer to keep them coming back for more. The retailer can’t just keep going back to the customer telling them to buy more of the same product.
The only exception is at the time of purchase. This is the time when it makes logical sense for the retailer and manufacturer to collaborate: at the time of checkout. That’s when you will find the retailer suggesting that the customer buy one of the compatible product accessories or services relating to the product. That’s when the manufacturer will be hoping you decide to buy a special accessory, discounted for a limited time with purchase. But after that, the gloves are off and both the retailer and the manufacturer play suitor to the ongoing purchase power of the customer. This is traditionally where customer relationship management (CRM) comes in to play – post purchase, from the moment of sale.
The retailer has historically had the competitive advantage because they are the point of contact and point of purchase with the customer, but this has recently changed through technology innovation. If you think back, it used to be that a customer would have to complete a product warrantee registration card post-purchase and mail it in to the manufacturer. Historically just 0.5%-1% of customers actually would bother to send in their card and register their product. Online innovation has improved this process by enabling the customer to go to a Web site to register their product. The latest technology, however, takes things a step further by enabling the customer to register their product from within the product itself. Called embedded CRM (eCRM), any product that connects to the Internet can enable the user to register their product as part of the set-up process. Once this takes place, the manufacturer has a direct link to the customer and can directly offer its own suite of after-sales add-ons and services and product upgrade opportunities.
Retailers of course can wipe eCRM systems from devices prior to sale to avoid this direct relationship taking place, but if they do so they are truly missing the greatest co-marketing tool to ever come into existence. The manufacturer and retailer should plan from the beginning to use eCRM to maximize the average revenue per unit sold from the co-relationship view they have with the customer. By providing the customer post-purchase with offers that drive sales of compatible products and services through the retailer, the manufacturer and retailer are meeting their shared objective of maximizing revenue per customer. The manufacturer achieves the same effect as if the retailer were selling all of their compatible accessories and services for them. The retailer achieves sales credits for out-of-store purchase that are happening post purchase that they would otherwise not receive.
Through eCRM stronger bonds can be built between the retailer, the manufacturer and the customer. What needs to be borne in mind is that these bonds need to be built on trust, which is what the customer is actually buying into when they buy any product from any retailer in the first place.
