CRM lessons from Ikea

We restricted ourselves to two potential furniture suppliers a UK-based company,habitat, with what appears to be a fairly conventional line of descent model, which provides fairly stylish, relatively expensive furniture, and kea, a Swedish furniture retailer with a less conventional product line model, with much less expensive furniture, perhaps less stylish. I thought that we would probably end up buying nearly all our furniture from Habitat, whereas in reality Kea was our main supplier.Whilst buying this furniture, a number of interesting points about Kikes business model became apparent o Most of Kikes products are delivered as flat-pack self-assembly kits. Habitat also supply goods in that format, primarily it seems, to ease shipment (and reduce associated costs). However, Kikes products had been designed not only to reduce shipment costs, but also to slander production assembly costs. Clever design had been used to produce goods which can be assembled by the purchaser with minimal skill (use of a screwdriver and spanner only), from separate manufactured by machine with little human effort in the production plant.The design also ensured a robust, stylish piece of furniture condescension the limited skills of the assembler. Much of the work involved in manufacturing the piece of furniture had been moved from the factory, to the client. The reduction in cost had also been passed onto the customer. For at least this customer, there was also a significant feeling of achievement in assembling the table or chair. The result a high quality piece of furniture at low-cost, but with a lot more work for the customer, but tit a resulting sense of achievement. There are differences in the retail press release model as well. Habitat provides a conventional Main Street retail outlet, with room to display the goods, and attentive sales staff to discuss the furniture. Kikes out-of- town, large outlet had the space to attempt something different. The products were displayed in a number of room mock-ups so that pieces could be seen in relation to other products, with design stations to help the customer to build their own design. Kea staff were on hand, but not as sales assistants, more to advise on sign, check whether stock was available, etc.This preliminary helps with the interior design aspects of selecting furniture, again for this customer at least, a difficult aspect of buying furniture. O Distribution It is here that the most obvious differences with a conventional retail store occur You stir to pick the goods from the warehouse yourself deliver (though there is a 3rd-party delivery service at a cost). all told this may appear to be poor customer service, but again, it takes out a lot of cost from the distribution process, and this is passed on to the customer. Customer Direct transactions If you think about it for a minute, because Kea wont take orders, it is key that customers can find out if Kea has a particular item in stock. (You dont want to go to an out-of-town store, to be told that what youve come for isnt in stock and the store doesnt take orders. ) Kea have confessd this and so provide an automatize phone service to allow you to check whether the item you want is in stock. That item is number 1 in the automated service menu startle plus mark.There are a large number of stores I use which I wish provided a similar service. Next, Id like you to think what ATA youd ask a customer for if you were designing a check-in-stock transaction. Well, its obvious isnt it you ask for the stock code. Well Kea dont think its obvious to a customer and when you use their service you recognize that theyre right. Instead, they ask you for a inventory page number, and then the price of the item youre interested in. They then tell you the items on that page at that price and you keep up which one you want.A pretty weird transaction by IT standards, but customer-friendly. If youre a customer interested in stock le vels, youre very likely to have the catalogue open. The page number is meaningful to you, is short and diffused to enter on a phone keypad (all digits). The price is also meaningful, again short and easy to enter (all numeric). No company Ive ever worked for has simple stock-codes. Someone has designed this transaction with the end-user (the customer) in mind. What, if anything has this to do with CRMIn my view, a lot o Kea have chosen to change from a conventional business model to reduce prices significantly, by placing a lot of burden onto the customer. CRM is not necessarily about purify customer service, but about giving the customer a better value reposition, or increased value for money. O Their change in business model leads to a need for a new transaction for the customer. That transaction is designed to be simple and fast for the customer to use. In Kens words (nearly) in this week newsletter theyve listened to their customers.