Tesco CRM: Impact on Customer Acquisition and Retention (UK)

This research proposal investigates the impact of Customer Relationship Management (CRM) on customer acquisition and retention, using Tesco (UK) as a case study. The study aims to critically evaluate various CRM methods, focusing on their effectiveness in acquiring and retaining customers. The research will explore Tesco's existing CRM practices, including the Clubcard loyalty scheme and online shopping services, and analyze their impact on sales and customer loyalty. The methodology will involve a descriptive study, collecting both primary data through surveys and interviews, and secondary data from existing records. The research will address key questions such as the features of CRM, influential factors in customer retention and acquisition, and gaps between Tesco’s practices and effective CRM strategies. The literature review covers CRM concepts, its impact on customer retention and acquisition, and Tesco's specific CRM strategies and their outcomes. The study will also address ethical considerations and research limitations, culminating in a research timetable and conclusion with recommendations for Tesco to improve its CRM practices.

Research methods for business and management
Course Work B: Research Proposal
Research Topic: A critical evaluation of the impact of customer relationship
management on customer acquisition and retention – Tesco (UK)
Submitted
by
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Table of Contents
1.0 Introduction.....................................................................................................................................2
2.0 Aims, objectives and research questions.........................................................................................2
2.1 Research Aims.............................................................................................................................2
2.2 Research Objectives.....................................................................................................................4
2.3 Research Questions......................................................................................................................4
3.0 Literature Review............................................................................................................................5
3.1 Introduction.................................................................................................................................5
3.2 Concepts of customer relationship management..........................................................................5
3.2.1 What is customer relationship management?........................................................................5
3.2.2 Key features of customer relationship management (CRM).................................................5
3.3 Impact of CRM on customer retention and acquisition................................................................6
3.4 CRM practices in Tesco...............................................................................................................6
3.4.1 Existing CRM in Tesco.........................................................................................................6
3.4.2 Reasons for adopting CRM in Tesco....................................................................................7
3.4.3 Impact of existing CRM in Tesco.........................................................................................7
3.5 The undertaken research on the proposed research topic.............................................................7
3.6 Conclusion...................................................................................................................................8
3.7 Conceptual framework.................................................................................................................8
4.0 Research methodologies..................................................................................................................9
4.1 Types of investigation..................................................................................................................9
4.2 Data Collection method..............................................................................................................9
4.2.1 Primary data..........................................................................................................................9
4.2.2 Secondary Data.....................................................................................................................9
4.3 Sampling Method......................................................................................................................10
4.4 Accessibility Issues....................................................................................................................10
4.5 Ethical issues.............................................................................................................................10
4.6 Data Analysis Plan.....................................................................................................................11
4.7 Research Limitations.................................................................................................................11
5.0 Research Time Table.....................................................................................................................12
6.0 Conclusion.....................................................................................................................................12
7.0 References.....................................................................................................................................13
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1.0 Introduction
Customer relationship managing (CRM) is the innovative concepts in current business world
which has been disclosed as one of the effective ways of acquiring and retaining customers
(Berry et al., 2009). Business organisations have been taking this concept as the top priority
to build up their products and services in the marketplaces. On the other hand, customers are
being benefited getting available information and knowledge of their desire products and
services through relationship marketing (Weinstein and Johnson, 2011). However, as Li and
Nicholls (2010) notes, many organisations are still now in dilemma about the effectiveness
and impact of building customer relationships in achieving their organisational goals and
objectives.
The proposed research study will determine quality of customer relationship and its impact
on the consumers retention and acquisition based on a particular organisation namely Tesco
plc, UK. The study will also focus on the issues which are responsible for quality consumers
acquisition and retention. As the impact of loyal consumers and the maximized profit of an
organisation is co-related, the proposed study will emphasis on sellers and buyers
relationships and management following the case study of Tesco and survey its consumers
relationship management (CRM).
2.0 Aims, objectives and research questions
2.1 Research Aims
According to Saunder et al. (2007), research aims focus on the intention and purpose of the
undertaking research work.
The aims of this research study is to critically analyse and evaluate several sorts of training
and development methods practiced widely in current business world to compare with the
existing ones in the Greggs Plc. Then, the study will suggest the suitable ones for Greggs Plc
to meet the current challenges of poor employee performance and sales target.
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2.2 Research Objectives
Saunder et at. (2007) state that, research objectives refer to the required steps to answer the
research questions and to meet the research aims and goals. Research objectives define how
the research aims can be achieved.
The objectives of this research study are:
a) To critically analyze and evaluate the widely practiced training and development methods
for organisations' staffs in current business world
b) To identify the merits and demerits these training and development methods.
c) To explore the employee training and development techniques which are being applied
within Greggs Plc at this moment
d) To suggest the appropriate training and development method for Greggs Plc to improve its
frontline staffs performance and meet sale target.
2.3 Research Questions
Research questions are identified to explore the research problems answering them to meet
the research aims and objectives (Saunder et al., 2007).
The research questions of the undertaking research are:
1) What are the current staffs training and development techniques widely practiced in
present business world?
2) What sorts of training and development methods are being practiced by Greggs Plc in its
current business, and how are they effective in improving employee performance and sales
growth?
3) How can Greggs improve its training and development programs to meet the current
challenges and both organisational and individual goals.
Main question
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How Tesco can improve its customer relationship management (CRM) to promote customer
acquisitions and retention?
Sub-questions
1. What are key features of customer relationship management (CRM)?
2. What are the influential factors of customer relationship management which can contribute
in retention and acquisition of consumers?
3. What features of customer relationships are Tesco practicing in its customer retention and
acquisition?
4. What are the gaps between effective customer relationships features and the Tesco
practices in its business?
5. How can Tesco fill these gaps to improve its customer relationships?
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3.0 Literature Review
3.1 Introduction
As part of literature review, the study first has focused on CRM concepts and its key features.
Then, the study has emphasised on impact of CRM on customer acquisition and retention.
Next, the research has concentrated on Tesco present CRM practices, the reasons and impact
of them. Then, the undertaken research on CRM and their impact on customer retention and
acquisition have been discussed. Following this, the study has summarised the findings.
Finally, it has build up a conceptual framework.
3.2 Concepts of customer relationship management
3.2.1 What is customer relationship management?
Customer Relationship Management is the establishment, development, maintenance and
optimisation of long-term mutually valuable relationships between consumers and
organisations (BT Consulting Julian Garrett, 2011). Successful CRM focuses on
understanding the needs at the heart of the business by integrating them with the
organisation’s strategy, people, technology and business process (CRM UK Ltd, 2000).
3.2.2 Key features of customer relationship management (CRM)
According to Krishna (2013), CRM consists of three key features: Operational CRM,
Collaborative CRM, and Analytical CRM.
Collaborative CRM refers to the direct communication with consumers through different
channels such as phone, SMS, email, and social medias like Facebook. This CRM include
customer feedback and reporting the issues raised. The key objectives of this CRM to
improve company services provided and reduce overall costs (Krishna, 2013).
Analytical RCM focuses on consumers data to investigate for various functions. The key
objectives of this RCM are to make management decision, plan and execute marketing
campaigns, predict future trends, and analyse consumers behaviours (Krishna, 2013).
Operational CRM support consumers through marketing, front office support to sales, and
other similar services. The main objectives of this CRM are to automate customer processes
and to provide excellent customer services (Krishna, 2013).
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3.3 Impact of CRM on customer retention and acquisition
Improve customer retention and loyalty
CRM attracts consumers for long time which increase customer retention and motivate them
to buy frequently. Organisations take initiatives according to customer feedback, which
improve bounding relationship gaining increased customer loyalty (Sharp, 2010).
Evaluate customer profitability and gain customer acquisition
CRM can support organisations to evaluate their customers profitability, identifying who are
gainer, who are loser, and who are the potential gainer in future. This evaluation support
organisations to gain customer acquisition (Sharp, 2010).
Increase customer profitability
CRM increases customer wallet-share through up-selling, follow-up sales, and cross-selling,
which satisfy existing customers and motivate them to refers others (Sharp, 2010).
Reduce costs in customer recruitment
CRM decrease customer recruitment costs saving in marketing, follow-up, contact, mailing,
services, and fulfilment. On the other hand, as existing customers stay for long-times and buy
more and more frequently, companies require less new customers (Sharp, 2010).
3.4 CRM practices in Tesco
3.4.1 Existing CRM in Tesco
As part of CRM, Tesco is apply various strategies. It sends mass-customized magazines
offering promotional copupons to its consumers. Tesco has launched a price cutting
campaign called 'Checkout at Tesco'. It has launched an initiative namely 'Healthy Eating'
confirming nutritional value to the consumers. It has introduced three formats of stores:
Tesco Metro, Tesco Express, and Tesco Extra Store. Tesco has launched 'First Class Service'
and 'One On Front' scheme. Finally, Tesco has introduced Clubcard Loyalty scheme and
online shopping services (Tesco Annual Report, 2013).
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3.4.2 Reasons for adopting CRM in Tesco
The key reasons are to improve management, to store sufficient customer data, to improve
customer satisfaction, to maximize channels sales, to manage inventory appropriately, to
conduct advance report, and to strengthen workforce management (Tesco Annual Report,
2013).
3.4.3 Impact of existing CRM in Tesco
Tesco sales has improved by 53% and floor space increased by 150% within last five years.
Tesco boasts about 500,000 transactions weekly worth of around £2 billion sales revenue
yearly through online space, tesco.com. Tesco is now able to contact their customers and help
them in their queries through Tesco Tech Supports. The Clubcard scheme attract more
customer attention than ever before. Overall, the customer retention and acquisition are
improving (Tesco Annual Report, 2013).
3.5 The undertaken research on the proposed research topic
The development of modern technologies providing available information to the mass people
have lead the business organisations to think about their customer acquisition and retention
through products customization and effective customer relationship management (CRM).
The advent of technologies have moved the business organisation from transactional to
relationship in recent years and helped the consumers to get knowledge of products and
services in the global market. Hence, as Berry et al. (2009), business organisations will
succeed following relationship business model in the current competitive market.
The present market has been more unstable than ever before because of rapid changes in
business world. According to Weinstein and Johnson (2011) suggestions, marketing effort of
75% business organisations must be customer oriented which can be gained through effective
customer relationship management and developing and retaining consumers. In addition, the
approaches of selling products and services have transferred from short-term quick scale
scenario to long-term business partners, where organisations create mutual agreement with
their customers as their business partners. As a result, as Li and Nicholls (2010) notes,
consumers buying behaviour is predicted with reduced operation costs in referrals and
acquisition. On the other hand, relationship provides values to every consumer who are the
key target of the organisations.
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3.6 Conclusion
As Krishna (2013) notes, organisations need to apply all three key features: Operational
CRM, Collaborative CRM, and Analytical CRM to gain satisfactory level of customer
retention and acquisition. Effective CRM strategies need to be applied to implement CRM
within organisations. Organisations need to create mission statement and customer
segmentations on how to deliver customer satisfaction. Effective customer relationships can
achieved competitive advantages through understanding of customers expectation and
developing new products and services.
3.7 Conceptual framework
The following diagram shows the relationships between key concepts:
Diagram: Conceptual Framework (Adapted from Sharp, 2010 )
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4.0 Research methodologies
4.1 Types of investigation
The proposed will apply descriptive study. Descriptive study refers to investigation where
data is collected without changing the environment. This type of investigation is also referred
as co-relational or observational studies, which describe real relationships between things in
nature. This study may include cross-sectional study (one time interaction with group) or
longitudinal study (follow individual over time). Researchers in this study interact with
participant through interviews and/or surveys to collect data. Researchers also may collect
data from existing record or through observation without interaction with participant
(Saunders et al., 2009).
This descriptive study will be applied in the proposed research work as a method for
collecting data which will explain relationship and describe the existing situation of CRM in
real world and Tesco. The researcher will get the answer of questions of what is existing
CRM in real world and Tesco collecting data through secondary sources, existing records,
interviews and surveys. Then, the researcher can experiment research work, collected data,
and case study to provide empirical data analysis and develop concept of customer
relationship answering the questions of how Tesco can improve its CRM. .
4.2 Data Collection method
As Saunders et al. (2009) suggestions, the proposed study will collect data using both
primary and secondary sources.
4.2.1 Primary data
The proposed thesis work will apply survey, interviews, and questionnaire techniques to
collect data. As the thesis will focus on consumer perception, the data have to be collected
directly from customers through survey. Data on existing CRM practice in Tesco will be
collected through interviews with Tesco management people. As Saunders et al. (2009)
suggestions, primary data will be collected directly from participants as first-hand experience.
4.2.2 Secondary Data
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According to Saunders et al. (2009) notes, the proposed thesis will collect secondary data
from existing documents and literature. The secondary data sources will include latest
journals articles, research reports, academic text books, websites, newspapers, social medias,
etc on the relevant field.. The secondary research might also include data from past
researches done by organisations like Tesco, consultancy firms, government agencies, and
trade unions.
4.3 Sampling Method
The research will be based on two different samples. One samples will include five particular
people from Tesco management for having interviews regarding how Tesco is following
CRM system to retain consumers. Five people are enough to collect reliable data because
Tesco is using advance CRM software where most of data is automatically ready to collect.
The other samples will include 50 randomly chosen consumers (where everyone will equal
chance to participate) for conducting surveys to know about customer feedbacks with the
Tesco CRM system. Opinions from 50 consumers will be enough to form statistical format
and covert to public readable format as valid and reliable source.
4.4 Accessibility Issues
The biggest accessibility challenge of the proposed research work can be to contact with five
Tesco management people for conducting interviews regarding the existing CRM practiced in
Tesco. In addition, accessing data from Tesco CRM software and database would be essential
for analytical purposes. Secondly, it would be difficult find out right Tesco consumers having
clear concepts of CRM for conducting survey regarding customer feedback with Tesco CRM.
However, data on CRM literature and widely practice in real world will be available through
internet research, books, journal articles, etc.
4.5 Ethical issues
Ethical issues of a research work are justified by some professional departments or bodies
which follow a codes of conducts and ethics to govern the organisation for market research
including both qualitative and quantitative (Saunders et al., 2009). As a result, the proposed
research work must be follow the codes of conducts with rules and principles. According to
the UK codes and conducts in Greene et al. (2011), the researcher in the proposed research
will have to inform the participants about the research areas, aims and objectives before
conducting the research, survey, and interviews. Secondly, the researcher must make sure of
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anonymity and safety of participant during the research period. The research will also have to
maintain any kind of legal, ethical and health and safety issues with the participant.
4.6 Data Analysis Plan
As the proposed research will collect both qualitative and quantitative data from both primary
and secondary sources, a mix approach of data analysis will be needed to triangulate and
cross-analysis to summarise findings and conclusion.
The survey questions will be coded for cross-tabulation and SPSS will be applied to support
analysis. Limited descriptive statistical analysis will conducted because of restricted
timeframe and small samples.
Qualitative data will be analysed in terms of themes and patterns and with coding system
based on findings related to research questions.
4.7 Research Limitations
The researcher intends to explore customer relationship management (CRM) for identifying
the factors impacting on customers acquisition and retention. As part of empirical research
the researcher will focus on the primary data through survey interviews. As the respondents
will be selected from a restricted areas around Tesco will raise questions of data reliability
and validity.
As the sample size of survey and interviews will total 55, some of the authentic and reliable
data might be mission which might provide confused data in the research work. In addition,
the time period is very limited which will give presser to the researcher to conduct the
research on time. Overall, the researcher will face very challenging time during the research
work.
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5.0 Research Time Table
5.1 Timeframe in Gantt Chart
5.2 Justification of proposed timeframe
Total timeframe of the proposed research work is three months (including weekends and
holidays), starts on 1 November 2014 and finishes on 30 January 2015. The research proposal
is finished by 15 days. Introduction and literature review is started at a time, consequently it
would be possible to complete by 37 days. Data collection and analysis are conducted
selecting appropriate methods and techniques by 24 days. After that, the research work is
summarised as finding and concluded and recommended by 9 days. Finally, the whole work
is reviewed in a day and the following day it is submitted.
6.0 Conclusion
The key objectives of proposed study is to specify the issues which focus on consumers
acquisition and retention following customer relationship management (RCM). The research
will be based on the case study of Tesco, UK. The recent decades show that the marketing
strategies of organisation like Tesco is moving to customer acquisitions and retention.
Consequently, the key aims of the study is to investigate the areas of customer relationship
management and exploring the impacts of this issue on the customer retention and
acquisition.
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7.0 References
Bryman, A. and Bell, E. (2009) Business research methods. 5th ed. New York: Oxford
University Press.
Diener, E. and Crandall, R. (2009) Ethics in Social and Behavioral Research. Chicago:
University of Chicago Press.
Fritz, A. (2009) How to Ask Survey Questions. 3rd ed. Thousand Oaks, CA:Sage.
Greene et al. (2011) Methods and Methodologies used in Research. 3rd ed. UK: Pearson
Education Ltd.
Klee. A and Thurau. T (2011) The impact of customer satisfaction and relationship quality on
customer retention: A critical reassessment and model development. Psychology and
Marketing. Volume 14, Issue 8, pages 737-764. Available at:
http://onlinelibrary.wiley.com/doi/10.1002/(SICI)1520-6793(199712)14:8%3C737::AID-
MAR2%3E3.0.CO;2-F/abstract. [Accessed on: 24 October 2014]
Kotler et al. (2009) Principle of marketing. 6th Ed. Prentice Hall: UK
Krishna, R. (2013) Key features of CRM. Available at: http://ezinearticles.com/?Key-
Features-of-CRM-(Customer-Relationship-Management)&id=762563. [Accessed on: 20
December 2014]
Payne (2010) A strategic framework for customer relationship management. 3rd Ed. Pearson
Education: UK
Sharp, D.E. (2010) Customer Relationship Management Systems Handbook. NY: Auerbach Publications,CRC
PressCompany.
Saunders, M., Lewis, P. and Thornhill, A. (2008). Research Methods for Business Students.
3rd ed. Harlow: Prentice Hall.
Spratt et al. (2009) Research Methods. 2nd ed. UK: Pearson Education Ltd.
Tesco Plc (2014) About us. Available at: www.tesco.com. [Accessed on: 22 October 2014]
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