Inside a Fired Customers

Relationship
Submitted by:
Deepika Gurnani
Manisha Rawat
Nikhil Saini
Parth Khanna
Prathmesh Waghmare
Rajesh A Nair
Business Model
Business model enables fast flow of inventory thereby reducing inventory cost
Automatic markdown method is used to price the product based on date stamp
Provides customers with new shopping experience bargain and thrill
Automatic markdown
The Date dictated the amount of discount received by a customer
The discounts on a product increased with the increase in the time the
merchandise was on shop floor
Faced initial criticism, people thought shoppers would not buy products in the
initial pricing cycle
Was proved wrong since people were afraid the selected merchandise would be
gone if they waited
Experience at Felines basement
People lined up for hours before the sales
Merchandise was displayed on tables and bins
Difficult to find complete assortment
Diverse products attracted both rich and poor
Shoppers hid the merchandise hoping for it to be there till the next markdown
The Felines Basement
The Felines Basement
1960s
Generated
greatest
sales per
square foot
1990s
Second most
popular
tourist
attraction
1989
Acquired by
Federal
department
store and then
by Campeau
Corporation
1998
First Bankruptcy ,
Rescued by value
city department
stores and then
to Buxbaum
Group
2009
Sol to Syms
Corporation
after another
bankruptcy
Finally closed
permanently in
2011
Impact of Changes
Increase in pressure over
managers for increasing profits
and sales
Increase in number of stores
further increased pressure on
managers and staff
Change in store staff frequently
leading to customer
dissatisfaction
No track of information on
shopping patterns of customers
Low control over decision
making at store level led to
decrease in specialized deals for
customers



The Felines Basement
Norma was a loyal customer for the past 20 years and was used
to special treatment from the staff
She had special status as one of The Regulars and was a
member of Filenes Basement Insiders club
But in recent past things changed, Norma was no longer treated
as a special customer
Filenes Basement eventually fired her for her excessive
returns and frequent registered complaints
Norma - The story of the Best Customer
More pressure on managers to perform
New employees not familiar with Norma
Tight profit margins
Evolved corporate Strategy
Change of Ownership
I will be honored with benefits and information not available to other customers; normal rules and policies dont
apply to me
Key reasons of change in behavior
Instances showing a change in relationship
Lack of recognition from employees.
Instance: Norma is not entertained room by the employees and they refuse to treat her special
Excluding Norma from the Insider club
Instance: Norma is not invited to join the insider club at Newton Store
Not provided with special treatment by the store manager or the CFO
Instance: Manager refuses to entertain or incorporate any suggestions suggested by Norma. Further, the CFO
suggests Norma to shop somewhere else as she faces too many problems at their store
Norma Feline relationship sours
I honestly dont think they knew how much I spent. I honestly dont think knew I was such a good customer
Reactions to the fallout
Norma refuses to go to the court but gets the story published to the media. And it follows 2 reactions from different
set of audiences
Consumers having
worked in retail talk
about their own horror
stories with problem
customers
Customers otherwise are
worried about the
manner in which the
companies are using the
data they are collecting
about them
Norma Feline relationship sours
Customer is the
King
Giving Customers what
they want
Attracting and
Delighting them in
order to retain them
Managing a portfolio
of customers
All Customers are not equal
Offerings should be
customized to reflect their
personalized value
CRM Systems and
software
Allowed companies to
capture a lot of data about
their customers
CRM systems helped the
companies to take
personalization to the next
level

Sophisticated CRM
with analytics
Customers could be
divided in different tiers
This helped the
companies to segment
their marketing efforts to
the perceived profit
potential


Customer Centricity to Customer Firing
Platin
um
Gold
Silver
Bronze
Lead
Reasons for the change
Companies realized it is uneconomical to serve
all the customers
Companies started evaluating customer on the
basis of revenue Vs Cost per customer
CRM software helped analyze consumer buying
behavior enabling them on customer on one-to-
one basis
30% of the customers are unprofitable
Vulnerable
Customers
Star Customers
Lost Causes Free Riders
Customer Experience
C
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o
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P
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y

Vulnerable
Customers
Star Customers
Lost Causes Free Riders
Customer Experience
C
u
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t
o
m
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P
r
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f
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Vulnerable
Customers
Star Customers
Lost Causes Free Riders
Customer Experience
C
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t
o
m
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P
r
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f
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Norma enjoyed special offers
She was member of The
Insiders Club
She got special invitations and
rewards
Employees went beyond the
company policies to serve her
Star Customer Free Rider
Norma s excessive product
returns
Her demand for special
preferential treatment
As a result her CLV reduced
Lost Cause
Filene revoked her special status
Her demand for special
treatment were not entertained
Norma was eventually fired
Norma From Best Customer to Fired Customer
Analysis & Recommendation
Issues with Business Model
Customers do not have time and facility to take judicious purchase decision which
leads to excessive return of products
Business model encourages excessive use of return policy and pamper the customer
to the extend that it became their major pain points
Is firing customer the right
decision?
No! It received negative publicity because of firing Norma
Alternate Course of action
Rather than direct firing, use subtle measure to fire the customers indirectly
Employ measures that discourage Free Riders from shopping in the store
Change the return policy to discourage excessive returns of products
- Charge customers for the product returned or
- Keep a limit on the number of items that can be returned in a month or
year