An Analysis of Customer Loyalty and Retention Strategies for Eroski

This essay examines customer relationship management (CRM) at Eroski, a Spanish supermarket and hypermarket chain. It identifies challenges in providing an optimum customer experience, such as customers' limited resources and the difficulty of addressing all customer feedback. The es...Read More

Customer relationship management
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[Company name]
[Company address]

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Customer relationship management (CRM) is an approach to manage the company's
interaction with its current and potential customers in an effective and efficient way.
Building CRM helps the customer in various streamline process such as it helps in increasing
sales, improve customer service, increase customer loyalty and faith towards the brand, etc.
The selected company for this essay is Eroski. The company was founded in 1969 in the
regions of Biscay and Gipuzkoa in Spain. As of 2016, the company had 442 generations shop
with 23 hypermarkets and 419 supermarkets. According to the statistics, sales of the company
grow by 7% on average. Eroski's turnover in the year 2016 is of €2,965million (Fis.com,
2020). The company deals in the business of supermarkets and hypermarkets in Spain. The
stores of Eroski includes a variety of food & beverages, household products, grocery items,
etc. For building effective customer relationship management, the company has to opt for
appropriate strategies that can help them in dealing with the barriers of effective CRM. In this
essay, there will be discussion challenges that management encounters while following the
parameters of customer loyalty and customer retention. With challenges, strategies for
customer retention will also discussed in this essay.
Challenges in providing an optimum customer experience
It is important to incorporate a brief discussion about the targeted audience of the company
before discussing the challenges that the company faces in increasing customer loyalty and
customer retention. The targeted audience of the company incorporates three classes of
people irrespective of their gender and age. While setting parameters for targeting audiences,
the marketing manager of the company focuses more on its audience's financial background
instead of their age and gender. Eroski's targeted audience incorporates three classes of
financial category groups that are middle-class income group, upper-middle-class income
group and higher-class income group. The fundamental aim of the company is to create a
place that includes all the items or products under one roof that satisfies the daily needs of an

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individual. The company makes strategies to fulfill its objectives through its supermarket and
hypermarkets. However, the management faces emerging challenges when they fail to retain
their customers because of various external as well as internal factors (Ascarza, et. al., 2017).
The company faces various challenges in the process of customer retention. As scarcity of
resources states that customers have never-ending demand and their resources are scarce.
This same law also operates not only in the Eroski’s supermarket stores but this law operates
in the entire retail industry. However, because of the applications of the law of scare
resources, this creates hindrance in the process of customer retention. For example: it is noted
that while visiting the retail store or supermarket store customers showcases their attitude for
their huge demands but they have less spending capacity (resources). Customers visit
different supermarket stores or they even check regular online offers so that they can
fulfilling the majority of their demand with fewer resources (money). In this case, it creates
challenges for the management of the company because now in order to retain customers, it is
important that they offer the goods at low cheap without decreasing the quality of goods or
their customer's services. When Eroski fails to offer the goods at bare minimum prices then it
decreases their ratio in customer retention and it resultant in increasing customer attrition
ratio of the company (Elena, 2016).
Ignoring customer feedback or not able to work upon the feedback receives from various
customers is another challenge that the management of Eroski faces in retaining its
customers. As feedback is the advice that customers share with the company in order to
improve their functioning but the company has around 800,000 customers in Spain. So, by
looking from the perspective of the company, it can be analysed that it is next to impossible
for the management to incorporate the feedback of all the people. For example: among
800,000 customers it can be expected that atleast 3% of customers make efforts to give
feedback. 800,000 of 3% is equals to 24,000. Now, even after 24,000 received feedbacks, it

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can be analysed that atleast 30% of feedbacks (7200) are genuine changes that should be
implemented effectively and efficiently. Thus, now it can be analysed that implementing
7200 new changes is next to impossible for the management. Out of 7200 changes, 200-300
changes get implemented in the or even this number fails. Here, it makes another customer
sad and they think that the working of the management of Eroski is slow and poor. This
creates major challenges for them for management in the process of customer retention
because every customer has different advice to share because of their different expectations
(Foltean, Trif and Tuleu, 2019).
Apart from the above challenge, Eroski also faces challenges in selecting appropriate
strategies so that they can increase their customer loyalty and customer retention ratio in an
effective and efficient way. The management has to figure out strategies that can help them in
increasing customer retention ratio but it is noticed that the management faces major
challenges in opting one or two specific customer retention strategies out of the pool of
strategies. The challenges of selecting an appropriate strategy are arisen because of the
changing taste and behaviour of the customers. As time passes the taste and preference of the
customers also change and it creates a major challenge for the management of the company
to specifically incorporate an effective strategy that they can increase their probability for
customer retention. However, while selecting the appropriate strategy for customer retention,
the management has to conduct an effective analysis of customer's current taste and ongoing
external market conditions. With this analysis, the management also has to consider their
break-even point and profitability analysis before implements any changes related to the
customer retention program (Navimipour and Soltani, 2016). As, it is noted that the majority
of the customer retention programs which are running by the company provides an extra
benefit to the customer in terms of getting items at cheaper prices. These customer retention

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programs are currently running by the company: Eroski Loyalty Program and Eroski Club
(Fis.com, 2020).
Customer service strategy for identified challenges
As customers have huge demands or expectations but they have less or limited resources.
When the company fails to offer them products at discounted rates then it is the tendency of
the customers that they travel to other retail stores, e-commerce websites, etc. to get products
at a discounted rate. Here, limited resources of an individual cannot be changed but in order
to enhance customer retention, the company can lower down their rates or they can
incorporate the strategy of “Monthly subscriptions”. In this strategy, the company should
empower customers to submit a list of their monthly needs such as toothpaste, soaps, kitchen
essentials, beverages, etc. When an individual agrees for using monthly subscription plans
then the customer will get these items at a bare minimum price or with atleast 20% discount
than the market rate (Rahimi and Kozak, 2017). Now, here the major question arises if how
the company will able to offer a 20% discount off each item to each individual? The solution
is the company should make necessary adjustments with its suppliers and they should make
future contracts with suppliers on today's price with bulk buying in the future. By engaging
customers into monthly subscription programs, it will help the management in getting assured
numbers of future orders. Following this point will help the company to get products at a bare
minimum price and then the company can pass this discount to the customer. Thus, offering
monthly subscription plans to the customers is an effective solution because the management
will get specific data about the future demand for current products. Later on, management can
make a contract with their supplier for a future date of bulk buying with discounted prices. In
this case, the company can transfer this discount to its customers and it will surely help them
in increasing their customer retention rate effectively and efficiently (Nyadzayo and
Khajehzadeh, 2016).

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Ignoring customer feedback is another. Here, it is not appropriate to mention that Eroski
ignores feedback that is received by the customers. It can be said that it is next to impossible
for the management to incorporates each and everyone's feedback (example for the same is
given above). In this case, the management should implement the system in which they can
publish their plans for future improvements. In this form, they should request the customers
to give them their valuable advice on their future development plans. In other words, this
strategy defines that instead of taking any feedback, the management should make a system
for customer feedback. In this system, it is requested from the customer to provide their
feedback for future implementations plans only. Customers can analysis the current situation
and they can provide necessary feedback about the future changes that should be
implemented in the company with effective and efficient efforts. For example: if the
management is planning for incorporating Artificial Intelligence and Machine Learning then
at the initial stage, the management of Eroski should make an open forum in which all the
customer feedbacks are welcome about the future implementation of AI and ML process
(Rahimi, 2017).
Apart from this, the company is also facing emerging challenges in selecting the appropriate
customer retention strategy. Here, the management should consider that there are various
customer retention strategies such as improving KPIs, customer feedback surveys, emerging
loyalty program strategy, etc. However, it is necessary that the company always conducts
external market research because it is general that the taste and preferences of the customer
always change or upgrades with time. While making plans for implementing strategies it is
important that the management should conduct effective market research so that they can
make an effective strategy that enhances their probability for customer retention. On the other
hand, any strategy which is against the customer's latest preference can resultant in an
increasing customer attrition ratio. Thus, it is extremely important the customer retention

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strategy chosen by the company should be in relation to the current taste and preference o the
customers (Soltani, et. al., 2018). For knowing their taste and preference the management has
to conduct a detailed analysis of the external factors that are currently influencing their
targeted audience's taste and preference. In the end, it can be said that identifying the current
taste and preference of the customers is an effective solution because this analysis will help
the management in making effective strategies for customer retention (Soltani and
Navimipour, 2016).
Possible challenges that can encounter while implementation and after implementation
of the above strategies
While implementing these strategies it can be expected that the major challenges may arise
from the adverse external conditions. As of the current scenario, the danger of Coronavirus is
roaming in the whole world and this fear is also hampering the economic activities of the
world. In the same manner, it can be analysed that the company may face difficulty in getting
a supply of the desired goods because manufacturers who have production in the other part of
the world are currently facing adverse issues in transferring goods. In this case, there are high
probability chances that the supplier may charge extra prices for sending goods. However,
not only from the suppliers but even the government of different countries are also making
strict trade policies due to the fear of Coronavirus. On the other hand, it can analyse that this
situation will only encounter until the effect of this fear. It can be expected that after 2-3
weeks from now situation and global trade policies will be gone normal. In this case, the
company should wait for some time until the global situations get normal (Soltani, et. al.,
2018).
After implementing these strategies, it can be expected that the company may face challenges
from other competitors. The management of the company should not ignore that other

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companies also have sophisticated teams of highly intelligent personalities. So, other retail
supermarket companies in Spain also makes customer retention strategies in order to increase
their customer loyalty and faith. Thus, the major challenges that the companies may face after
implementation of the strategies are directly related to the decisions which will make by other
companies (Thakur and Workman, 2016).
Recommendations
Eroski can adopt the strategy of a mentorship program in which it can offer guidance to the
new employees and provide all the information regarding the policies and structure of the
organization. This can support the organization to motivate the employees by making familiar
it with the company policies and another staff member. This can also help the organization to
understand the opinions and attitudes of the new employees towards the company policies.
The company can also adopt the strategy employee compensation by offering attractive
compensation packages which include salaries, bonus and other benefits to the employees.
This can motivate the employee to perform efficiently in the organization and can retain them
in the long run (Talón-Ballestero, et. al., 2018).
Eroski can also adopt the strategy of increasing communication and using a 360-degree
performance appraisal method to evaluate the performance of the employees. This can
support the employees to evaluate their performance and can understand the gap which lies in
their performance. This strategy can support Eroski to motivate the competent employee and
can retain them by increasing their productivity in a particular area. The company can
provide other benefits to the employee which include flexible working hours to the
employees. The organization can also adopt the strategy of providing recognition and reward
to the competent employees this can increase the performance of the employees. It is because
this is considered the way of appreciating the employees so that the organization can retain
specialize employees in the organization (Yerpude and Singhal, 2018).

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It is concluded that the management of the company should focus on delivering low-cost
goods to their targeted audience in order to stop them from approaching other core
competitors and other e-commerce websites. However, for delivering low-cost goods it is
important that the company should make contracts with its suppliers for the delivery of goods
at a low cost. In this essay, it is also concluded that management may face various challenges
while implementing these strategies. Currently, due to global fear of the Coronavirus, the
trade activities around the globe are going slow and in this context, the management may also
face possible in approaching their supplier who supplies goods or products from overseas.

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References
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